Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — TRADE

Industrial Democracy

Mr. Hal Miller: asked the Secretary of State for Trade what representations the Government have received so far from trade unions against the majority report of the Bullock Committee.

Mr. MacGregor: asked the Secretary of State for Trade how many representations he has received to date on the Bullock Report.

Mr. Forman: asked the Secretary of State for Trade what representations he has received regarding the report of the Committee of Inquiry on Industrial Democracy.

The Secretary of State for Trade (Mr. Edmund Dell): To date I and my

Department have received 17 letters about the Bullock Report. None of these has been from a trade union.

Mr. Miller: Representations need not necessarily be made by letter. Would the Secretary of State agree that the work force has become demoralised by the continuation of pay restraint, by unemployment and by the manifest failure of the Government to adhere to any consistent industrial or commercial policy, and that they are therefore unlikely to be bought off with a couple of seats on the board?

Mr. Dell: I take it that the hon. Gentleman thinks that that is a valuable comment at this point. I think that it is necessary to have a third phase. I regret the level of unemployment. I think that it would be desirable to have a system of worker directors.

Mr. MacGregor: In the context of representations, has the right hon. Gentleman seen the text of the speech last week of the Chairman of the National Enterprise Board, in which he pointed out the serious dangers of leaving middle management out of the participation process, describing them as "the odd men out"? In view of the recent Opinion Research Centre survey showing the serious decline in morale and motivation of middle management, will the right hon. Gentleman ensure that the interests of middle management are properly and fully taken into account in the process of consultation?

Mr. Dell: Yes, the position of middle management in the German system is one of the things that I discussed fully while I was there. It is certainly an important aspect of this matter. It is not necessarily true that a special constituency is the right approach, but it is certainly something that we shall consider.

Mr. Forman: Is the right hon. Member also aware of the considerable public hostility towards the idea that worker representatives on boards should be there by trade union appointment? Did he see the MORI survey reported in The Sunday Times some time ago, which showed that over 87 per cent. of all those polled opposed this method and that even 84 per cent. of trade unionists favoured election by all the employees of the company concerned?

Mr. Dell: I have seen that survey. I made it clear in my original statement when the Bullock Report was published that the method of selecting or electing worker representatives was a matter for consultation.

Mr. Parkinson: Is the right hon. Gentleman aware that many of us feel that this important long-term decision should not be part of any short-term wage deal with the trade union movement? Will he assure us that he will do his best to make sure that it is not?

Mr. Dell: Certainly, and I notice that Mr. Murray said on television—I think I am quoting him correctly—that he did not regard this as any part of a shortterm deal. What we are going for here is a long-term settlement. That is why we are engaging in serious consultation.

Mr. Skinner: Would my right hon. Friend agree that, whatever our views about the Bullock Report and industrial democracy generally, we would both agree, would we not, that a general tradeoff, with Bullock on one side and wages on the other, is highly unlikely when one remembers that some of the trade unions and their leaders are against Bullock and also against pay restraint? The argument is a fallacious one, to say the least.

Mr. Dell: I think that my hon. Friend's comments are very wise.

Mr. Adley: asked the Secretary of State for Trade what differences he has discovered, at recent meetings he has had with EEC colleagues, between their machinery for worker participation and the majority proposals in the Bullock Report.

Mr. Dell: Most of our EEC partners have developed systems of worker participation suited to their own particular needs and traditions. Naturally there are many variations in the systems adopted in each country and between these and the majority proposals in the Bullock Report.

Mr. Adley: Is there any other country in the EEC where those who are allowed to vote on the principle of participation are subsequently specifically denied any say in the choice of who their representatives shall be? Will the Secretary of State understand that many of us who are interested in the successful outcome of the negotiations on industrial participation believe that this particular aspect of the Bullock Report makes a mockery of the phrase "industrial democracy"?

Mr. Dell: As far as I am aware, there is no other country which makes this particular provision in respect of the selection of worker directors. I have said that this is a matter which we must consider and consult about. I am grateful that the hon. Gentleman wishes us a successful outcome to the discussions.

Mr. Cronin: Does my right hon. Friend agree that in countries which have had Socialist government over the past few years the combination of industrial efficiency with worker participation in direction and Government help has been uniquely successful?

Mr. Dell: As a result of my visit to Germany, I certainly think that my hon. Friend's remarks are correct and that industrial democracy as operated there has been a significant element in the success of the German economy.

Mr. Nott: As the Secretary of State has said, there are a wide variety of different schemes in operation on the Continent. Is he aware that the Conservative Party cannot see why it is right to lay down a legislative framework? Is the right hon. Gentleman aware that by


proposing legislation he cannot ensure the flexibility that is available on the Continent and which we wish to see in this country? Why does he wish to propose a legislative framework? We are against it.

Mr. Dell: I wish to propose a legislative framework because I think that there is no other basis upon which we are likely to have success. I am by no means certain that the hon. Gentleman is right in saying that a legislative framework is inconsistent with flexibility. On the contrary, we would hope to work out a legislative framework which was consistent with flexibility.

Mr. Robinson: Is my right hon. Friend aware that, since his predecessor pushed hard to have a report by 14th December last year, we on this side of the House would be very dismayed if the Government were now to back off in respect of the early implementation of at least the essential elements of the Bullock Report?

Mr. Dell: I note what my hon. Friend has said. There is no question of backing off. We have said that we will provide legislative proposals to the House by the summer.

Mr. Bulmer: Does the right hon. Gentleman accept the part of the TUC side of the Bullock Report which suggests that two to six weeks on a TUC residential course will qualify an employee to discharge the main line responsibility of a director of ICI when, as he will know, it normally takes 25 years, or does he accept the view of Commissioner Gundelach that employee directors function best on the stem of proven structure and that this normally takes up to 10 years to operate successfully?

Mr. Dell: If the hon. Gentleman is telling me that we cannot have worker directors who have not benefited from 10 to 25 years' training on the board, I do not agree. It is a feature of the experience of many people that they learn while working within their company. We are proposing to elect to boards, or to select for boards, people who have worked in the company and have experience in the way that it operates. I would not accept any of the types of bar that the hon. Gentleman has suggested.

Companies (Audit Committees)

Sir B. Rhys Williams: asked the Secretary of State for Trade if it is his intention to include provision for the appointment of audit committees in large companies as an element of the proposed Bill implementing the recommendations of the Bullock Committee; if the subject will be dealt with in the forthcoming White Paper; and if his Department favours the appointment of audit committees in advance of legislation.

The Under-Secretary of State for Trade (Mr. Clinton Davis): We are examining proposals for audit committees alongside the more fundamental reappraisal of the structure of companies, including the composition and function of the board of directors, following publication of the Bullock Report. I cannot anticipate the outcome of this.

Sir B. Rhys Williams: Would not the hon. Gentleman agree that the question of the management audit is completely separate from the issues raised by the Bullock Report? Is he aware that in North America the practice of appointing audit committees is becoming almost automatic? Does he not think that legislation without delay in this country would be highly beneficial?

Mr. Davis: I am aware of the experience in the United States and Canada, and we are considering it. I cannot agree that the two matters are as separate as the hon. Gentleman suggests. When we are looking at legislation in the post-Bullock situation, it is right that we consider the suggestions that the hon. Gentleman has been putting forward challengingly for some little time, and that we undertake to do.

Mr. Baker: Will the Minister give us some idea of the timing of the whole of the Bullock programme? Is there likely to be a debate in the House in the near future? I know that the hon. Gentleman will say that that is a matter for the Leader of the House. Is there to be a White Paper? What is the likely timing of the White Paper? Surely the hon. Gentleman owes it to both sides of industry to give them some indication of the Government's time scale for the negotiations and decisionmaking process following the Bullock Report.

Mr. Davis: As for the debate, the hon. Gentleman has guessed absolutely correctly. That is a matter for my right hon. Friend the Leader of the House. The other matters that the hon. Gentleman raised were dealt with by my right hon. Friend when he made his statement. The most immediate matter of concern is that consultation will be going ahead to see whether it is possible to arrive at a reasonable consensus.

Aircraft Flight Paths

Mr. Jessel: asked the Secretary of State for Trade by what criteria he decides on flight paths for aircraft take-offs.

Mr. Clinton Davis: The main criteria which I have to take into account are safety, technical and economic factors, and the importance of minimising nuisance from noise to people on the ground.

Mr. Jessel: Is the hon. Gentleman aware that, while the present split in the Mole Valley take-off flight path has brought some welcome relief to Hampton and Hampton Hill, it has made conditions unbearable for many people in Whitton, Twickenham, Teddington and Strawberry Hill, as he knows from the 400-plus complaints that he has received from my constituency, which has been more affected than any other? Will he examine what can be done to relieve those places? Will he consider sympathetically any scheme to do so that does not add substantially to the noise in Hampton and Hampton Hill?

Mr. Davis: As the hon. Gentleman well knows, there is a division of opinion among his constituents. I am prepared to consider any reasonable proposals that are forthcoming. We want to arrive at the best solution of a difficult problem that will benefit all those who are affected by aircraft noise.

Mr. Ronald Bell: Will the hon. Gentleman also take into account in the selection of routes the approach of saturation level from the point of view of many people on the ground? Does he agree that the growth in movements and the projected growth from Heathrow are such that we should be re-examining the question of a third London airport at Maplin?

Mr. Davis: The question of the third airport at Maplin, which was not commended by the vast majority of those in the House, does not arise from this Question. As for the first part of the hon. and learned Gentleman's supplementary question, that is a consideration that is relevant to our deliberations on this matter.

Mr. Russell Kerr: Is my hon. Friend aware that many on the Benches behind him are getting a little sick and tired of the pettifogging tactics of some Opposition Members who are trying to gain cheap publicity? Does he appreciate that the best advice we could give him, were he to ask us, would be to continue with the policy of giving encouragement to quieter aircraft engines so that the problem can be tackled fundamentally and not in the nit-picking way that is advocated by certain Opposition Members?

Mr. Davis: I am grateful for my hon. Friend's advice. I shall come to him whenever I think it appropriate to seek his advice. The experience of the Government in dealing with noise at London and other airports has far exceeded the value of the work done by their predecessors, as is indicated by the clear evidence that is now on the record.

Welsh Wool Exports (Canadian Quotas)

Mr. Wigley: asked the Secretary of State for Trade if he will take steps to negotiate increased import quotas for Welsh manufactured woollen garments and clothes exported to Canada.

The Under-Secretary of State for Trade (Mr. Michael Meacher): The EEC Commission has requested consultations under Article XIX of the GATT about Canadian quotas in certain clothing imports. I hope that this will result in early action to amend the restrictions.

Mr. Wigley: Is the hon. Gentleman aware that in recent years a number of companies in Wales have worked extremely hard to develop an export market in Canada and that the steps taken by the Canadian Government last November in imposing quotas at the 1975 level could hit those companies disastrously? Will he give an assurance that he will take up the matter with the Canadian Government directly and that the


products of certain Welsh companies, such as tapestry and tweed, can be brought into the category of speciality lines, which I understand the Canadian Government are willing to consider as exemptions?

Mr. Meacher: I am well aware of the significance of the Canadian action. As the hon. Gentleman has said, the Canadian Government have recently announced special arrangements in respect of special hardship cases and speciality items. I shall consider the possible inclusion within that category of the items that the hon. Gentleman has mentioned. If I feel that that would be of value, I shall take up the matter direct with either the Canadian or the EEC authorities.

Mr. Ronald Atkins: Why is it necessary for the Canadian Government to impose quotas on a trade of such low proportions? If they feel that that action is appropriate, could we not be a bit sterner in the imposition of import controls or quotas on textiles that come en masse into this country?

Mr. Meacher: My hon. Friend is not quite right about the effect of the textile trade on Canada. In the first half of 1976 Canadian imports of garments increased by 52 per cent. over the same period in 1975, which was a considerably faster increase in textile imports in those categories into Canada than into the United Kingdom. My main answer to my hon. Friend is that we are already protected under the Multi-Fibre Arrangement and the 13 bilateral restriction arrangements that we have made through the EEC which limit almost all textile imports from low-cost countries not only in cotton but in wools, manmade fibres and knitwear.

Multi-Fibre Arrangement

Mr. Madden: asked the Secretary of State for Trade what progress is being made in the renegotiation of the Multi-Fibre Arrangement; and if he will make a statement.

Mr. Nicholas Winterton: asked the Secretary of State for Trade what further progress has been made in renegotiating the Multi-Fibre Arrangement; and if he will make a statement.

Mr. Dell: The first round of discussions about the future of the Multi-

Fibre Arrangement took place in the GATT Textiles Committee in Geneva in December. At that meeting the EEC spokesman made a strong statement in favour of renewal of the arrangement with major changes. A further round of discussions is expected to take place in Geneva at the beginning of March.

Mr. Madden: Does my right hon. Friend accept that these negotiations are regarded as crucial to the future of the British textile industry? Will he give an undertaking that the British Government will continue to pursue a most vigorous approach to these negotiations and will not be persuaded by anyone to agree to a built-in increase in imports into Britain? Will he also arrange for a recession clause to be inserted into the agreement? Will he tell the House when he expects the negotiations to be concluded?

Mr. Dell: I agree entirely that the negotiations are crucial to the textile industry. I can assure my hon. Friend that our approach will bear that in mind. We are discussing our negotiating position within the European Community, but I think that the first statement of the Community's position was right. The particular points that my hon. Friend mentioned, such as a recession clause, are among the matters that we have in mind in renegotiating the agreement.

Mr. Arnold: Is it not the case that the original agreement was based on a demonstrably false premise—namely, that the developed world would always require more textiles?

Mr. Dell: The original arrangement was based on the premise that the developing world and the developed world had to trade, but there must be controls if there is to be a possibility of survival for the British textile industry and the necessary process of adjustment.

Mr. Hoyle: Will my right hon. Friend please take note that the last Multi-Fibre Arrangement was regarded among the textile companies as being meaningless in many respects? Many of the quotas were far too high Will my right hon. Friend press for something that will help the hard-pressed textile industry in respect of low-cost imports in future?

Mr. Dell: We shall press for a renewed Multi-Fibre Arrangement with major changes along the lines discussed with both sides of the industry in this country. I do not accept my hon. Friend's statement that the existing agreement is meaningless. On the contrary, it has provided a valuable degree of protection for the industry.

Mr. Nott: As changes to the Multi-Fibre Arrangement are undoubtedly very necessary, is the right hon. Gentleman aware that burden-sharing within the Community is also very important? When is there to be an opportunity for the right hon. Gentleman to discuss with his European partners the present burden-sharing arrangements and our own view that these are not fair to Britain?

Mr. Dell: That is a matter that will arise when the present arrangement is renegotiated. The burden-sharing arrangements within the existing agreement are a valuable feature of it and are the sort of thing that we wish to see continue.

Mr. James Lamond: Has my right hon. Friend read the 31st January edition of the American magazine Business World, which clearly shows the fundamental difference of approach between the American negotiators and the British and EEC negotiators? The Americans are anxious to make political capital in countries such as Korea, Taiwan and Brazil, and the EEC negotiators are anxious to see that the last arrangement, which cost 400,000 jobs to the textile industry in this country, is not repeated.

Mr. Dell: I have not seen that edition of Business World. I am aware that the United States' approach to the negotiations is different from that of the European Community. But the level of penetration of the United States market is much lower than that of the Community market.

Mrs. Kellett-Bowman: Will the Secretary of State disillusion his hon. Friend the Under-Secretary, who imagines that the textile industry is protected under the existing agreement? Clearly the right hon. Gentleman has a better appreciation of that matter than his colleague has. When negotiating another agreement, will

the right hon. Gentleman please be certain to relate the level of imports in any year to the state of the market and secure a clear definition from all the signatories to that agreement of what constitutes a cottage industry, so that there can be no cheating under the guise of helping "cottage industries" which are nothing of the kind?

Mr. Dell: My hon. Friend is well aware of the problem, both as a Minister and as a constituency Member. I do not think that he needs any education on the nature of the current arrangements. Whether the details of the arrangements should require that trade be related to the state of the market is one of the matters under consideration in the present discussion. I know what the hon. Lady is referring to when she speaks of cottage industries. That is a matter which is under separate discussion in Brussels and Delhi.

Merchant Houses (Third Country Trading)

Mr. Sims: asked the Secretary of State for Trade if it is his policy to encourage third country trading by British merchant houses.

Mr. Meacher: Yes, Sir.

Mr. Sims: Is the Under-Secretary aware that the recent restrictions on the use of sterling in third country transactions is making this type of trading particularly difficult, and that the more flexible and cheaper facilities offered by the United States and Continental banks mean that valuable confirming business that took place in London is in danger of being lost? Will the hon. Gentleman discuss with the Chancellor of the Exchequer the way in which the new restrictions are operating, and particularly how they are affecting trading of this type?

Mr. Meacher: Perhaps the hon. Gentleman could give us some examples. I am well aware that the new exchange control rules announced on 19th November require British merchants to borrow foreign currency to finance merchanting operations involving third country transactions, but there is a limit to the extent to which we can afford to tie up our external reserves in trade that is not directly geared to the future of this country. But even in that respect I certainly hope that the Eurocurrency market


centred in London will be able to provide sufficient foreign currency for such transactions. The banks have indicated that that is their expectation.

Mr. Neubert: Whether or not the Under-Secretary is aware of it, it is the case that, because of our traditional relationships or the relative weakness of the pound against other currencies, some suppliers and producers will insist in dealing in sterling. As our foreign competitors can continue to do so, are we not, for the sake of this once-and-for-all gain, prejudicing permanent benefit to our invaluable invisible earnings by this rather short-sighted measure?

Mr. Meacher: That is not the view taken by those dealing in this field, but if the hon. Gentleman can give me significant evidence we shall consider easing the arrangements.

Labour Party Properties Ltd.

Mr. Ridley: asked the Secretary of State for Trade if he will initiate an inquiry under Section 32 of the Companies Act 1967 into the affairs of Labour Party Properties Ltd.

Mr. Clinton Davis: This is a company limited by guarantee and, in the absence of issued share capital, the directors cannot be in breach of the disclosure provisions of Section 32 of the 1967 Act. There are, therefore, no grounds for such an inquiry.

Mr. Ridley: Is the hon. Gentleman aware that in addition to this problem the company seems to have been appallingly badly managed, leading to possible negligence by the directors? Now that it is insolvent and probably trading illegally, does he not think that he should put aside any party bias and appoint inspectors to see what has gone wrong in this disastrous example of a property flop?

Mr. Davis: What is abundantly clear is that the hon. Gentleman, as a former Minister in the Department of Trade and Industry until he was sacked, had not taken the trouble to do his homework in this matter. It is clear that Section 32 has no relevance. As for the criteria for investigation under Section 165, neither I nor my right hon. Friend is in the least concerned with the identity of the directors or the aims and objects of

the company, except in so far as they relate to an inquiry.

Mr. Skinner: Does my hon. Friend agree that it is no part of the Labour Party's business to become property speculators, as apparently was the case way back in the 1960s, and that we should all now welcome the recent statement by the newly elected Labour Party Treasurer, my hon. Friend the Member for Tottenham (Mr. Atkinson), who has made it clear that under his stewardship we shall get out and honour our obligations?

Mr. Davis: I do not think that that has anything to do with me in my capacity as a Minister who may authorise an investigation under the Companies Acts. I do not believe, as a matter of fact, that the company in question was at any time engaged, as my hon. Friend said, in propert speculation.

Mr. Tebbit: Will the hon. Gentleman, as a Minister, advise the Putney Labour Party which section of the Act it should use to try to recover the £40,000 it has lost in this wretched company? It has lost its headquarters as well, and the Minister should be concerned about that.

Mr. Davis: I am delighted, as the House will be, to know the hon. Gentleman's compassion for the Putney Labour Party. I have enough difficulty advising the Hackney, Central Labour Party, without becoming involved in the Putney Labour Party.

Mr. Jay: Has the company had any assistance from what is known as the "lifeboat" provided by the Bank of England, which, at a cost of several hundred millions of pounds, rescued a number of City companies two years ago?

Mr. Davis: I am aware of that lifeboat. My involvement as a shipping Minister is with lifeboats of another kind.

Civil Aviation (Bermuda Agreement)

Mr. Tebbit: asked the Secretary of State for Trade if he will make a statement on the progress he has made in renegotiating the Bermuda Agreement.

Mr. Arnold: asked the Secretary of State for Trade what further progress has been made in the Bermuda Agreement negotiations; and if he will make a statement.

Mr. McCrindle: asked the Secretary of State for Trade if he will make a statement on the present position of Bermuda Agreement negotiations with the United States of America.

Mr. Dell: An economic assessment bas been made by both sides, which makes it clear that our proposals will benefit both the airlines and the travelling public. During the recent visit of the United States Vice-President, my right hon. Friend the Prime Minister and I made it clear that we hope the Americans will be prepared to negotiate meaningfully at the next round of talks on 28th February in London.

Mr. Tebbit: Is the right hon. Gentleman aware that we all wish him well in his efforts to secure a better share of the air transport traffic for British airlines, particularly on the North Atlantic? Has he yet discovered, however, that the United States authorities have no intention of restricting their airlines by a policy of single designation on the North Atlantic? Does he agree that his policy is therefore becoming impractical in that direction, as well as unlawful, in trying to force single designation in this country?

Mr. Dell: I am grateful to the hon. Gentleman for his initial remarks. I note what he says about the impracticality of my proposals. I hope that he will not take on the responsibility of negotiating on behalf of the United States Government. They are perfectly capable of making that point themselves if they wish. I assure the hon. Gentleman that nothing that I am doing in this field is unlawful. I have the right under the law to negotiate on this basis, and that is what I propose to do. Of course, it is open to the House, if hon. Members do not like the agreement when it is made, to express that view, but there is nothing unlawful in what I am doing.

Mr. Arnold: Since the Sherman Anti-Trust Act expressly forbids United States carriers from entering into discussions with other airlines without the consent of the Federal Government, would it not be helpful for the British Government to allow British Airways to enter into such discussions, since that might persuade the Americans to be more flexible?

Mr. Dell: Airlines are, of course, represented in the discussions that take

place in the course of this renegotiation. But if the United States Government have proposals to make—I hope that on 28th February they will have—they will be carefully considered.

Mr. McCrindle: In retrospect, does not the Secretary of State feel that these negotiations have succeeded only in souring our relations on civil aviation matters with the United States, particularly at a time when crucial decisions on Concorde are being approached? Does he not feel that the best line he can take is to suspend the discussions on the Bermuda Agreement and broaden our discussions with the United States to take on board such matters as Skytrain?

Mr. Dell: The hon. Gentleman is mistaken in his remarks. Under the existing Bermuda Agreement we are entitled to fly Concorde into New York. Evidently one of the characteristics of the agreement is that it does not yet enable us to enforce that right. That is an inadequacy in the Bermuda Agreement. I hope that the hon. Gentleman will support me in trying to get a better agreement in that respect as well as in others.
I do not think there is any need for these negotiations to sour relations with the United States. Our proposals undoubtedly cause difficulties for the United States, because we wish for a better share of the revenue that arises in air transport involving our two countries. That is inevitable. If, however, one takes that as the objective, one has to decide whether it is the right objective. I think that it is. I hope that I take the Opposition with me in that view.

Laker Airways Skytrain

Mr. Rost: asked the Secretary of State for Trade if he is now able to state what action he proposes in relation to the Laker Airways Skytrain project.

Mr. Dell: With permission, I shall answer this Question at the end of Question Time.

Imports

Mr. Ronald Atkins: asked the Secretary of State for Trade what was the total value of imports into the United Kingdom for the first nine months of 1976; and what proportions of this were manufactured goods, including machinery


and transport equipment, fuel, food, drink and tobacco, raw materials and chemicals, respectively.

Mr. Meacher: £22,000 million cif, of which manufactured goods, excluding chemicals, accounted for 47 per cent., chemicals 6 per cent., fuel 19 per cent., food 14 per cent., drink and tobacco 1 per cent. and raw materials 10 per cent.

Mr. Atkins: Is the proportion of manufactured exports still too low, despite price competitiveness, because of the falling value of the pound or the fall in real wages? What is wrong? Has it been due to exporters lacking energy or to the protection of foreign domestic markets?

Mr. Meacher: The level of manufactured exports is never something that any Minister in the Department of Trade can be entirely satisfied with. One would like to see it higher both relative to our total exports and in absolute terms. Of course the industrial strategy, which brings together both sides of industry with the Government, is precisely intended to increase our share both of domestic markets and of markets overseas. The reasons for the lack of success in the past are very deep, and the industrial strategy intends to get at the roots of some of these in the medium term.

Mr. Michael Morris: In view of the speed with which the EEC dealt with the dumping of bearings, may we have an undertaking that before these matters go over to the EEC the Minister will get rid of many cases that are sitting in his Department?

Mr. Meacher: We shall certainly endeavour to wind up as many of the cases as we can before 1st July 1977. I welcome what the hon. Gentleman has said about the EEC. However, most of the applications that we have had from British industry are concerned about exactly the reverse.

Mr. Powell: Why does the Minister want to see a higher proportion of Britain's exports represented by manufactured goods?

Mr. Meacher: Because that is in the interests of Britain as a major manufacturing country within the West.

Mr. Loyden: Does not my hon. Friend agree that concern is being expressed in certain parts of British industry about the apparent development of protectionism against British manufactured goods? For example, it is alleged that British Leyland is importing from the United States machinery the equivalent of which is being built in this country, while its goods are still restricted by the United States. Also, in the shipbuilding industry the intervention by the Irish Government denied a Merseyside contractor getting a contract even though the price he tendered was 40 per cent. below that of his nearest rival.

Mr. Meacher: We are concerned about tariffs, particularly in respect of textiles but also in the case of certain manufactures that my hon. Friend has mentioned which are significantly higher than the tariffs on imports into this country. I can assure my hon. Friend that, consistent with the requirements laid on us under GATT, we do everything possible. particularly in the multi-lateral trade negotiations, to reduce overseas tariffs.

Mr. Spriggs: What machinery exists to protect British industry against the re-export of manufactured goods from our Common Market partners?

Mr. Meacher: I am not quite clear as to the exact relation of that supplementary question to the Question on the Order Paper, but my understanding is that, under Section 7 of the Import Duties Act 1953, there are normal drawback facilities which apply in these cases. I am not aware of difficulties. Perhaps my hon. Friend will contact me about any of which he knows.

Concorde

Mr. Hastings: asked the Secretary of State for Trade whether he will make a statement on the position with regard to access for Concorde to Kennedy Air port.

Mr. Dell: I am disappointed that the New York authorities have not yet given their approval for Concorde. We and the French have been in touch with the United States Administration at the highest level. We are considering what further action might be appropriate.

Mr. Hastings: Is it not the case that Air France and British Airways are


operating Concorde to Washington with a 90 per cent. load factor? Does not the evidence to date indicate that the noise levels and the environmental impact do not constitute a problem? In these circumstances, I agree wholeheartedly with what the right hon. Gentleman has said and suggest that he should bring the maximum pressure to bear on the new American Administration about what to us must be an entirely unsatisfactory and unacceptable delay. Would it not help if he pressed on with the introduction of services to the Far East, which might serve powerfully to concentrate American minds and also the minds of those considering orders for Concorde in that part of the world?

Mr. Dell: We are bringing pressure to bear on the United States Government. We have indicated to them that this is a matter with which public opinion both in this country and, we believe, in France is deeply concerned. The development of services to the Far East is a matter for other countries besides this one and, as the hon. Gentleman knows, there are certain problems. I do not think that we should be diverted from the present problem of getting Concorde into New York as our principal objective in the development of this aircraft's international routes.

Mr. Adley: Has not the "dirty tricks brigade" in New York had the field to itself long enough? In view of what the right hon. Gentleman has said, and as the previous American Federal Administration were known to be helpful, will the right hon. Gentleman put it to President Carter that we shall regard it as a test of the sincerity of his commitment to fair play that the trial authorised by former Secretary Coleman should be allowed to take place as soon as possible, and that that trial will disprove all the fabrications by the anti-Concorde industry in New York?

Mr. Dell: The hon. Gentleman can be assured that we have made our feelings plain to the United States authorities at the highest level. I would not agree that the field has been left to the "dirty tricks brigade". On the contrary, a successful exhibition organised by the Consuls-General of France and Britain has persuaded a considerable segment of influential New York opinion that it

would be valuable if Concorde were allowed into New York.

Mr. Jay: Is my right hon. Friend pushing energetically enough for the inauguration of regular flights to the Far East and Australia, since it is highly desirable to get this matter settled as soon as possible?

Mr. Dell: Yes, we are pressing. On the other hand, my right hon. Friend must remember that there are problems regarding transit of India which are not yet resolved, and there are also problems relating to the availability of aircraft and trained crews. The question we have to decide is where our priorities lie. I have indicated that in my judgment—and I think that British Airways agree—the first priority is to get Concorde into New York.

Mr. Nott: Is the Secretary of State aware that our negotiating position is very strong in this matter? Is he further aware that he has the full support of the Conservative Party for getting Concorde into New York and that we wish him the best success in his endeavours?

Mr. Dell: I am grateful to the hon Gentleman.

Tourism

Mr. Neubert: asked the Secretary of State for Trade what are the estimated gross foreign currency earnings attributable to United Kingdom tourism, the amounts spent by United Kingdom citizens on holidays abroad and the resultant balance on the tourist account, for the years 1975 and 1976 respectively.

Mr. Meacher: With permission, I will circulate this information in the Official Report.
United Kingdom earnings were increasing faster than expenditure abroad last year and the favourable balance was improving from £239 million in 1975 to over £400 million in the first nine months of 1976.

Mr. Neubert: Is it not clear from that reply that, at a time when there has been little else to cheer about, the growth of tourism in the past year has been one of our success stories? What positive ideas do the Government have for encouraging the tourist industry and this healthy trend?

Mr. Meacher: I welcome the hon. Gentleman's opening remark that this is one of Britain's great success stories. Indeed, I myself recently said so loud and clear on television. On the question of improvements, we have the tourist guidelines which we brought in in November 1974, and these are gradually coming to fruition in conjunction with new policies about which, I hope, we shall soon be able to make an announcement, particularly in respect of the so-called "fragile" areas.

Mr. Powell: What?

Mr. Meacher: For the benefit of the right hon. Gentleman, that is to promote the potential of tourism in the development areas.

Mr. Donald Stewart: The Government are blocking a Bill introduced by my hon. Friend the Member for Argyll (Mr. MacCormick) to make Scottish banknotes legal tender. In the light of that, will the hon. Gentleman confirm that it would be legal for any tourist to take an unlimited quantity of Scottish banknotes out of the United Kingdom, since the Government would regard it merely as a suitcase full of waste paper?

Mr. Meacher: That is really a question for my right hon. Friend the Chancellor of the Exchequer.

Mr. Mike Thomas: Why do the Government persist in spending so much on promoting tourism in Scotland and Wales compared with the amount spent in England?

Mr. Meacher: What my hon. Friend says is not entirely true inasmuch as, under Section 4 of the Development of Tourism Act 1969, which includes development areas, the funds we have cover the north of England as well as Wales and Scotland. I am aware of the point that the per capita expenditure is much lower in England, but that is because most of England is not in development areas, whereas almost the whole of Scotland and Wales is.

Mr. Wigley: Will the hon. Gentleman confirm that the balance of funds in respect of tourism in Wales is very strongly on the positive side? Will he also confirm that the funds given to the Wales Tourist Board are very much less than

the funds given to the Irish Tourist Board, and that if we were to get the equivalent in Wales a still stronger balance of pay. ments could be achieved there?

Mr. Meacher: Yes, Sir.

Following is the information:


UK BALANCE OF PAYMENTS



Travel Account
£ million



Credits
Debits
Balance


1975
1,114
875
239


1976 (January-September*
1,135
718
417


*Seasonally adjusted. Figures are not yet available for the fourth quarter of 1976.

Power Plant Industry

Mr. Mike Thomas: asked the Secretary of State for Trade whether he will make a statement on the proposals to help the export efforts of the electrical power plant industry made in the CPRS Report.

Mr. Whitehead: asked the Secretary of State for Trade what conclusion he has reached on the CPRS Report into the power generating industry with respect to further assistance for exports.

Mr. Meacher: The Government are considering very carefully the recommendations of the CPRS Report on the United Kingdom power plant industry, and the question of export assistance is part of that consideration.

Mr. Thomas: Is my hon. Friend aware that the CPRS Report made it clear that a stable home ordering programme is a condition of export success? Is he aware also that the report made certain comments about turnkey contracts and export finance which require very detailed talks? Is he further aware that, despite the deletion of some parts of the report on, I am sure, legitimate grounds of commercial confidentiality, it is no secret that many of our competitiors in this area cheat? What is my hon. Friend doing about it?

Mr. Meacher: Questions on a steady domestic ordering programme and the other main recommendations of the CPRS Report are primarily a matter for my right hon. Friend the Secretary of State for Industry. The question of export aid in regard to turnkey problems is a matter for the National Enterprise Board, which is carefully examining it. I hope


that we shall be able to make an announcement very soon on the question of general export aids, but I cannot prejudge today the outcome of our study of the report. The question of practices by our overseas competitors in respect of assistance for power plant exports is also one into which we are looking carefully. If my hon. Friend has any evidence, we will take it up with the countries concerned.

Mr. Whitehead: Will not my hon. Friend accept that "soon" must mean soon—in other words, the end of the month or thereabouts—if we are to defeat the problems faced by the industry? Does he not accept that there are fears that overseas competitors, particularly on Middle East contracts, are putting out hard-nosed, commercial propositions masquerading as aid? Will he take up this matter if specific examples are brought to his notice?

Mr. Meacher: I have already indicated that we will take up these matters if they are brought to our notice. On the subject of the mixing of aid concessions and hard-nosed trade credit, we are aware that in France the policy involves crédit mixte, a system which we do not operate in this country on the reasonable ground that it leads to war in terms of export subsidy. We believe that the better policy is to try to obtain international agreement to withdraw such aid. Where there are particular cases in which softer terms are offered, the ECGD will examine the matter without prejudice. Where we feel that it is right and proper, we shall match such an effort.

Mr. Rost: Does the Minister believe that to force the power plant industry into one massive monopoly supplier will assist the consumer?

Mr. Meacher: That was the recommendation of the CPRS Report, and we are examining it.

British Airways

Mr. David Watkins: asked the Secretary of State for Trade if he will issue a general direction to British Airways to present him with proposals for the reorganisation of management on industrial common ownership principles.

Mr. Clinton Davis: No, Sir, but I am considering how industrial democracy might be best applied in British Airways.

Mr. Watkins: Is my hon. Friend aware that what is proposed in the Question is a more democratic system of management than anything proposed in the Bullock Report and is especially suitable to publicly-owned industry, of which British Airways is such an outstanding example?

Mr. Davis: Present experience is confined to small and medium-sized firms rather than to major nationalised industries, but my hon. Friend's comments will be taken into account.

Mr. Tebbit: Would the Minister like to know that I agree with the hon. Member for Consett (Mr. Watkins) that such a structure would be much more democratic than the structure envisaged in the Bullock Report? If the Minister changes his mind and gives such a direction, will he ask the board of British Airways to recommend where employees are to raise the capital to purchase British Airways from the taxpayer?

Mr. Davis: I am gratified that the hon. Gentleman has some form of agreement with my hon. Friend the Member for Consett (Mr. Watkins) in making more democratic the structure of the management board of British Airways. However, the hon. Gentleman's concluding remarks were a littte cynical and not at all constructive.

Import Substitution

Mr. John Garrett: asked the Secretary of State for Trade if he will publish a statement on his policies for import substitution.

Mr. Meacher: The Government are concerned to ensure that every opportunity is taken to stimulate competitive home production. Our work on the industrial strategy and our agricultural and energy policies are structured with this consideration in mind.

Mr. Garrett: Does my hon. Friend accept that some of us are disturbed at the silence of the Department of Trade on this subject? Does he appreciate that many of us believe that import substitution is as important a part of trade policy as is export promotion, and that we look


forward to the day when the Department will establish a unit and a plan for import substitution?

Mr. Meacher: I agree that import substitution is the other side of the coin of export promotion. My hon. Friend should be assured that we have a significant input in the Department into industrial strategy. The action ultimately to be taken in industry is discussed by the three sides. We hope that there will be a significant increase in the share of domestic and overseas markets that can be operated within the 40 sectors that are being examined.

SUITS

Mr. Canavan: asked the Secretary of State for Trade whether he has completed his study of the Stock Exchange inquiry report into the company SUITS; and what action, if any, he intends to take.

Mr. Clinton Davis: In the light of the evidence in my possession, I have concluded that there are no good grounds for appointing inspectors under Section 165 of the Companies Act 1948. My right hon. and learned Friend the Lord Advocate has not yet concluded his inquiries into the matter.

Mr. Canavan: Will my hon. Friend ensure that all the findings of his investigation are passed on to the Lord Advocate, who is in charge of prosecutions in Scotland, because if Sir Hugh Fraser or anybody else involved in breaking the law is seen to be getting away scot-free it will bring the law into disrepute by encouraging people to believe that there is one law for the rich and another for the poor?

Mr. Sedgemore: There is.

Mr. Davis: My Department has acted in close liaison with the Department of my right hon. and learned Friend the Lord Advocate, and all relevant information has been passed to him. Any action that he takes must be a matter for him and not for me.

Sandals (Imports)

Mr. Michael Morris: asked the Secretary of State for Trade for how long negotiations on arrangements for imports of women's and children's sandals from

Poland and Czechoslovakia have been going on in order to settle the 1977 quota.

Mr. Meacher: The European Commission invited Poland and Czechoslovakia towards the end of last year to enter into negotiations about restraining their exports of women's and children's sandals to this country.

Mr. Morris: Is the Minister aware that some of my hon. Friends and I came to his Department in August to discuss the subject of sandals but that since that time well over 1 million extra pairs have been dumped in this country? Does that not make a mockery of the negotiations?

Mr. Meacher: That contradicts what the hon. Gentleman said earlier about the rapidity of negotiations organised by the EEC. The EEC has a responsibility in regard to the intergovernmental bilateral considerations, of which the hon. Gentle. man is well aware. A satisfactory arrangement was reached in regard to Romania, but in the case of Poland and Czechoslovakia there have been difficulties in organising discussions with the EEC, but I hope that they will begin soon. I give the assurance that if we are not soon in sight of a voluntary solution, which we would prefer, we shall have to examine some system of quota protection.

European Community

Mr. Marten: asked the Secretary of State for Trade what was the trade deficit on a balance of payments basis with the EEC for 1976.

Mr. Meacher: Figures on a balance of payments basis are not yet available for 1976 as a whole. On an overseas trade statistics basis, our crude trade deficit with the rest of the EEC in 1976 was £2,222 million—£164 million less than in 1975.

Mr. Marten: Is the Minister aware that month after month we have been told that the figures will improve, but that if one takes the December figure the deficit is now running at a total of £2,600 million? When on earth shall we see the so-called benefits of membership of the EEC?

Mr. Meacher: The answer to the last point is, on a strictly economic basis,


a matter of conjecture. However, the hon. Gentleman is not right to say that there has been no improvement, because in the first three quarters of 1976 the United Kingdom's deficit with the EEC was reduced by £300 million while our deficit with the rest of the world worsened by nearly £500 million.

Mr. Jay: Is my hon. Friend aware that the figures with the EEC show an improvement only if we include Denmark and Ireland, which were in a free trading relationship with us before we joined the EEC, but that if we take only the Six the situation is even worse?

Mr. Meacher: That is a different point. My right hon. Friend may well be correct in saying that, but if we examine our trading experience since we entered the EEC we see that it has deteriorated markedly, although in the case of our trading with Japan and the United States there has been a somewhat more pronounced deterioration compared with our trading with the EEC.

Heathrow Airport (Development Project)

Mr. Hugh Jenkins: asked the Secretary of State for Trade if, having regard to the increase in noise nuisance and possible hazard to which residents living under the flight paths will be subject if the proposed extension to Heathrow terminals is permitted to go ahead, he will forbid this development.

Mr. Clinton Davis: The noise and safety implications will be taken carefully into account in the consideration of proposals to expand Heathrow, but I cannot anticipate the outcome of the present consultations on airports policy.

Mr. Jenkins: Is my hon. Friend aware that the proposal substantially to expand the facilities at Heathrow is almost tantamount to the creation of an additional facility? The consequence must mean that people who live underneath the Heathrow glidepath will suffer a greater degree of annoyance than has happened hitherto. If it is necessary to expand the number of landings in the area, would it not be more reasonable to expand landings elsewhere—for example, at Stansted instead of at Heathrow?

Mr. Davis: The considerations that my hon. Friend has invited me to undertake are part and parcel of the consultation process, which, we hope, will shortly be concluded. As to the increase in the facilities at Heathrow, my hon. Friend will know that there is an increased use of the larger-bodied, quieter-engined aircraft, and the conclusions that he has drawn are not necessarily true.

Mr. Jessel: Do not people living around Heathrow already suffer from an intolerable nuisance, and if another terminal is opened will not the nuisance inevitably increase? Will the Government allow that to happen?

Mr. Davis: I hope that the intolerable nuisance to which the hon. Gentleman referred was not the correspondence with me in which he indulges. I do not regard the correspondence in that light. I have said on many occasions that people who live under flight paths are faced with real difficulties. The Government are taking steps—and have done so steadily since 1974—to moderate some of these difficulties.

LAKER AIRWAYS SKYTRAIN

The Secretary of State for Trade (Mr. Edmund Dell): With permission, Mr. Speaker, I will now answer Question No. 10.
The Court of Appeal found against the Department in the case of Laker Airways versus the Department of Trade in respect of the vires of paragraphs 7 and 8 of the guidance issued to the Civil Aviation Authority in February 1976—Part II of Cmnd. 6400—and of the use of the Crown Prerogative in relation to the possible designation of the Laker Skytrain under the United Kingdom-United States Air Services Agreement, generally known as the Bermuda Agreement. After careful consideration I have decided not to appeal against the Court of Appeal's decision.
I shall now ask the United States authorities to act on the designation of Laker Airways under the present agreement. This agreement is, however, due to expire on 22nd June this year and the Government are engaged in negotiating a new agreement with the United States. Our policy remains one of single designation and capacity rationalisation on


long-haul routes and we shall continue to press this on the United States Government. I am sure that the tailoring of capacity to demand on North Atlantic routes commands general support in the interests of the British economy, of airline passengers and of the conservation of fuel.
As regards the period after the expiry of the agreement, I am already in discussion with Mr. Laker. I envisage negotiating a special arrangement with the United States to cover the operation of Skytrain as licensed by the Civil Aviation Authority.
I must emphasise that the Government's general policy of spheres of interest between British Airways and British Caledonian remains unchanged. This policy has received the approval of both Houses of Parliament. The interpretation placed by the Court of Appeal on Section 3 of the Civil Aviation Act 1971 could cause difficulty in the field of licensing policy, and consequently I propose to introduce legislation when parliamentary time permits to clarify the situation. In the light of the foregoing, I do not think it would be helpful at this stage to issue new guidance to the Civil Aviation Authority.

Mr. Rost: I welcome the Minister's belated recognition that not even this Government can place itself above the law and get away with it. Why did it take him so long to accept that he had exceeded his powers? Will he give full-hearted, rather than half-hearted, support to the Laker Skytrain project and confirm that he intends to make compensation for the damage and financial loss that his unjustified vendetta against Laker Airways has caused?

Mr. Dell: There was a reasonable case that the policy that was approved by this House in respect of Laker Airways was within the law. It was right that the case should have been decided in the courts, because it was challenged by Laker Airways. The court of the first instance and the Court of Appeal have now decided that the policy was outside the law, and I have accepted that. I shall certainly try to get Skytrain into the United States and I am involved in discussions with the United States authorities. No question of compensation arises.

Mr. Tebbit: Is the Minister aware that neither I nor any of my colleagues thought, any more than did the former Secretary of State when he announced his policy, that it was ultra vires, although it has now been proved to be so? Does the Minister remember that in a letter of 27th August 1975 a senior official in his Department informed Mr. Laker that the United States CAB was ready to process his application speedily if the Secretary of State changed his mind about it? Is there not every reason, now that the Secretary of State has changed his mind, why a speedy affirmative response should be given by the United States of America? Would not the best token of the Minister's sincerity be an invitation to Laker Airways to join British Caledonian and British Airways, as a scheduled carrier, at the Bermuda renegotiation talks?

Mr. Dell: I am aware of the correspondence to which the hon. Gentleman has referred. It was certainly stated that the CAB would give prompt attention to issuing a permit if the British Government once more took up the question of the Skytrain licence with the United States authorities. But I should not conceal from the House that there may be considerable delay under United States procedure before Skytrain can operate. I shall try to get Skytrain into the United States.
As to Laker joining British Caledonian and British Airways as a scheduled carrier, I remind the House of what the CAA said about Skytrain—that it was an experiment. My own judgment is that we are more likely to have success in getting Skytrain into United States if we negotiate a separate memorandum of understanding. But this is a matter upon which Mr. Laker may wish to make representations to me. That is the present position and I believe that that would be the most effective way of dealing with the matter.

Mr. Higgins: How much money has been wasted by the Government and Laker Airways as a result of the Government's decision to vote against the amendment that was moved by the Tory Party when the guidelines were debated? Have the Government any legal basis for giving guidance under the assumptions that were made when the guidelines were debated and, if not, is it not imperative that there


should be legislation immediately rather than a period in which the Government may be taking actions—for which they have no legal justification?

Mr. Dell: If the hon. Member for Worthing (Mr. Higgins) had listened to his hon. Friend the Member for Chingford (Mr. Tebbit) he would have heard him say that nobody thought that the guidance given by the former Secretary of State was ultra vires. It was a matter of doubt, and it is not for the hon. Gentleman, any more than anybody else, to claim a triumph in this matter. As for the legal basis for giving guidance, it is for the Secretary of State to give guidance under the legislation. Paragraphs 7 and 8 of the guidance now under consideration have been judged ultra vires, but guidance can still be given.
The policy of spheres of interests that the House approved remains Government policy and will continue to be implemented, but if legislation in respect of Section 3 of the Civil Aviation Act 1971 requires clarification, we shall provide that at an early date. I do not think that any serious difficulties will occur in implementing the policy of spheres of interest.

Mr. McCrindle: Does the Secretary of State anticipate that, in the light of his decision, Pan-American, TWA and British Airways may apply to run similar services across the Atlantic, and if British Airways did so, what would the Government's reaction be?

Mr. Dell: It has always been argued that if the Laker Skytrain were allowed to operate, other airlines might wish to run similar services. The initial decision would lie in the hands of the Civil Aviation Authority, but I have an appellate jurisdiction in the matter. We shall see the attitude of the United States airlines, but it has been argued in the House that if the Laker Skytrain operated, United States airlines might well have similar ideas. That is why I have said that it is inevitable that there will be a period of negotiation. I hope that it will be short, but there are many problems that will have to be sorted out.

Mr. Nott: Is the Secretary of State aware that we very much welcome his acceptance of the Court of Appeal's finding which, whatever he may say, involves

some criticism of his predecessor for acting ultra vires the law? Is he also aware that we are glad that at least one Socialist Minister accepts that the rule of law applies to Labour Ministers as well as to every other citizen of this country? Is the right hon. Gentleman aware that we shall wish to reserve our position on legislation and that I can give no assurances in regard to that at the present time?
We are glad to hear that the Minister will give his unqualified support to Laker in getting a Skytrain service to the United States, but will he use all his powers to ensure that the United States Government issue the necessary permits to enable Laker's operations to go ahead until 1982, which is the date when the present licence is due to expire?

Mr. Dell: I do not think that any comment is necessary on the hon. Gentleman's remarks about the rule of law. I said in my statement that I envisaged negotiating special arrangements with the United States to cover the operation of Skytrain as licensed by the Civil Aviation Authority—and that means until 1982. That is what I shall try to do because that is what the licence says. The method which I decide upon to try to get Skytrain into the United States must be a matter for me, but I have said that I shall try to get Skytrain into the United States.

MISS ANNA MENDLESON (PAROLE)

Mr. Whitelaw: Mr. Whitelaw (by Private Notice) asked the Secretary of State for the Home Department whether he will make a statement on the release on parole of Miss Anna Mendleson.

The Minister of State, Home Office (Mr. Brynmor John): First, may I express the apologies of my right hon. Friend the Home Secretary, who is unavoidably unable to be present to answer this Question as he is on an official visit from which he could not return in time.
The House will recall that Miss Mendleson was one of the defendants in the "Angry Brigade" case following a series of bomb attacks in this country during 1970 and 1971. She was convicted and sentenced to 10 years' imprisonment. Her earliest date of release—taking account of the time she spent on remand—would


have been in July 1978 if she were granted the normal one-third of sentence as remission. In fact, she was released on parole in November 1976 after she had served half of her sentence.
Persons are eligible for release on licence on parole after they have served one-third of their sentence. The case is first considered by a local review committee and thereafter the more difficult cases are considered by the Parole Board. The Board takes into account many criteria, and these were set out in a statement made by the previous Home Secretary to the House on 4th August 1975. One of the most important factors is to ensure the protection of the public. There are, however, many other considerations, including the attitude of the prisoners after a period in prison, their response to authority and their home and employment prospects if released.
The recommendation of the Parole Board that Miss Mendleson be released was referred to the Home Secretary, who took the view that, in the interests of the individual and society as a whole, release was, in fact, justified at that time, namely after she had served half of her sentence. Miss Mendleson remains on licence until July 1978 under the aegis of the Probation Service.

Mr. Whitelaw: Does the hon. Gentleman agree that the public and the police, who are facing and fighting terrorism, deserve the whole-hearted support of the the Government and of the House? In these circumstances, is not the protection of the public the first consideration and are the House and the country not entitled to some very compelling reasons indeed why Miss Mendleson has been released so early in her sentence?

Mr. John: I said in my reply that the protection of the public was a first consideration of the Home Secretary, but the decision is his. The Parole Board made the recommendation and it is for my right hon. Friend, having considered that recommendation, to decide whether the request for release should be acceded to. In this case, after going into it very carefully, he felt that it was right to do so.
Along with the right hon. Member for Penrith and The Border (Mr. Whitelaw), my right hon. Friend has enough experience of combating terrorism not to be unduly soft or to be ignorant of the cones-

quences of terrorism. Nevertheless, in the interests of the individual and of society as a whole, he felt that it was right to take the decision which he took in this case.

Mr. Orbach: As the constituency Member for Miss Mendleson and her family, I wish to congratulate my hon. Friend on his reply and to say to the right hon. Member for Penrith and The Border (Mr. Whitelaw) that he was a member of—

Mr. Tebbit: The hon. Gentleman is supposed to be asking a question.

Mr. Orbach: I am sure that Mr. Speaker will interrupt me if I am out of order.

Mr. Speaker: Order. The hon. Gentleman knows that he must address his question to the Minister.

Mr. Orbach: Is the Minister aware that the right hon. Member for Penrith and The Border was a member of the Government which released Leila Khaled, who was a terrorist arrested on a plane and handed over to the Metropolitan Police? She was released by the Government of which the right hon. Gentleman was Home Secretary. In those circumstances, he is the last person in the world to raise this issue.

Mr. Whitelaw: I held many other posts, but I was not Home Secretary.

Mr. Orbach: I thought that this was not a laughing matter. My hon. Friend will be aware that Miss Mendleson was visited by her hon. Member in Holloway Gaol on a number of occasions. I found that she was teaching illiterates there to read and write. [HON. MEMBERS: "Ask a question."] You are a silly lot of fellows.

Mr. Speaker: Order. The hon. Gentleman knows that his remarks are addressed to me, and I do not like what he just said.

Mr. Orbach: The last person in the world on whom I would wish to cast aspersions is a fellow countryman such as yourself, Mr. Speaker.
Is my hon. Friend aware that this young lady has been teaching art to prostitutes, dope smugglers and pickpockets in prison and that her request for parole was supported by a warden,


the welfare officer, her tutor, the art teacher and myself? Is it not right that she should be reunited with her family as she has expressed regret for what she has done and, now that she has served half her sentence, she will make a very good contribution to society?

Mr. John: The effect of a term of imprisonment upon an individual is one of the things which the Home Secretary has to bear in mind when giving consideration to Parole Board recommendations. I say to all hon. Members that any Home Secretary bears a very heavy responsibility and has a very difficult task in considering these matters. I notice that Lord Carr of Hadley paid a great tribute to the Parole Board and the care which it takes before making such recommendations.

Mr. Eldon Griffiths: Can the Minister say what effect he thinks this decision will have on two groups of people? First, are the IRA not likely to conclude that the release of a person after only four years of a sentence for an extremely serious terrorist offence is an encouragement to others to do the same? Will not their morale be increased?
Secondly, what effect does the hon. Gentleman think that this will have on the British police, who are risking their lives on our behalf? Will he take it from me that within the police service there is revulsion and anger at what the Home Secretary has done?

Mr. John: I hope that nothing that I have said will be taken in any way as condoning or encouraging the IRA. We have frequently condemned their crimes. In connection with those members of the IRA who were convicted last week, the hon. Gentleman will know that the procedures in life cases are different from those where determinate sentences are made, where the law allows for consideration of parole after one third of the sentence has been served.
I pay tribute to the work of the police both in this case and in others. The police know that my right hon. Friend must consider the effect on the individual of continued imprisonment and the effect on society of releasing that person. Only when there is no real likelihood of a repetition of the offence is parole allowed.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: This is a Private Notice Question. I shall allow only two more questions, unless the right hon. Member for Penrith and The Border (Mr. Whitelaw) wishes to intervene again.

Mr. Beith: Is the Minister aware of the deep public concern that terrorist prison sentences may not in fact amount to what they appear to amount to? Does he recognise that since other considerable sentences have been passed lately people fear that these, too, will last for only a short time? Since the House has taken a clear decision that the death penalty is not to be used, is it not important that we establish a system in which the public can have confidence?

Mr. John: The public is fully aware of the parole conditions because they have been publicly announced. There is no secrecy about this matter. As I have already explained, sentences to life imprisonment which carry a recommendation for a minimum term to be served are completely different. Completely different criteria are involved and the views of the judiciary are sought.

Mr. Aitken: Does the Minister accept that this release may be setting a disturbing and, indeed, dangerous precedent? Is he aware that those who take part in terrorist bomb attacks do, in the view of the vast majority of the public, deserve to serve deterrent sentences? Is he aware that if there is unexplained commutation of sentences there is bound to be a loss of morale among the police and security services and a loss of confidence among the public?

Mr. John: No precedent has been set. This prisoner was considered for parole in exactly the same way as other prisoners with determinate sentences. Obviously my right hon. Friend looked very carefully at the criteria and he considered the case with the utmost care before he assented to the recommendation. The public is entitled to be aware that parole is available for prisoners who are serving determinate sentences. My right hon. Friend has said many times that he is not resiling from the attack on terrorism. I ask the House to bear in mind that the effect on the individual is one of the ways of safeguarding the public and society.

Mr. Whitelaw: Is the Minister aware that of course we in the House—and some people outside—appreciate the position of parole and of the Parole Board and are aware of the difficult decisions that the Home Secretary has to make in the vast majority of normal cases? Do the questions in the House today not show that terrorist offences are regarded as being in a different category by hon. Members and by the country? Does he agree that such offences should, therefore, be looked at differently? From his answers this afternoon and from what the hon. Member for Berwick-upon-Tweed (Mr. Beith) and others have said, it appears that the Minister's answers are unsatisfactory. Does he accept that the protection of the public must be the first criterion of the Government? Will he give an assurance that in terrorist cases the protection of the public and the morale of the police and of those who are fighting terrorism on our behalf to protect us will be the first criteria in any such decision?

Mr. John: I have already indicated that the first consideration of any Home Secretary is the safety of the public and society. Of course it is important to build up the morale of the various forces in their fight against terrorism. But the chief protection of society involves a humane method of releasing people when they are thought fit and when it is believed that they will re-enter society and play a useful part in that society.

Mr. Lawrence: In view of the unsatisfactory nature of the Minister's reply, I beg to ask leave to move the Adjournment of the House under Standing Order No. 9.

Mr. Speaker: I have listened carefully to the exchanges, and I must tell the House that I cannot give precedence over the ordinary business of the House to the matter raised by the hon. Member for Burton (Mr. Lawrence).

Later—

Mr. Gow: On a point of order, Mr. Speaker. My hon. Friend the Member for Burton (Mr. Lawrence), without advancing any reasons to you, asked leave, as I understood him, to move the Adjournment of the House, arising out of the statement by the Minister of State. I rise to ask you, Mr. Speaker, whether

it would be in order for another hon. Member to advance reasons to you as to why he thinks that there should be an emergency debate on this subject, and, if so, whether you will permit me to do so.

Mr. Speaker: I think not. The hon. Member for Burton made his application, and I would be setting a dangerous precedent if I allowed someone else to take it up. Then there would be a third, and then there would be a fourth. I think that it would be unwise, and I think that I can rule that it would not be in order.

QUESTION OF PRIVILEGE (MR. SPEAKER'S RULING)

Mr. Sedgemore: I wish to raise a matter of privilege relating to criminal proceedings, an hon. Member of the House and his constituents.
Recently during the course of my parliamentary duties I received certain documents which I had, and indeed have, reason to believe came from constituents of mine and I passed them on to the relevant Government Department. That Department discussed the contents of these documents with the police. I subsequently gave permission for the documents to be examined by experts, and the outcome is that criminal proceedings may be taken against constituents of mine and I may be required to be a witness for the prosecution in those proceedings. Indeed on Friday I was asked to make a witness statement by the police in Luton in respect of criminal proceedings against two of my constituents. Should I make this statement I would be required to produce in court the documents to which I have already referred.
I told the police officers that before making any statement I would seek to raise with you, Mr. Speaker, first, the question of any privilege which might arise in relation to the documents; second, any question of confidentiality which might arise out of the relationship between a Member of Parliament and his constituents; and, third, the propriety or otherwise of a Member of Parliament giving or refusing to give evidence against his constituents over criminal charges which have arisen in part in relation to his parliamentary duties.
On the first point, Mr. Speaker, I seek your guidance on whether any


privilege attaches to communications between a Member of Parliament and his constituent and, if so, does the privilege exist to protect the constituent, the Member of Parliament or Members of Parliament generally? You will appreciate, Mr. Speaker, that in the case of solicitors and their clients, privilege does exist to protect the client and that this can, as this House has seen recently, have unfortunate consequences. Is a Member of Parliament in the same relationship to a constituent as a solicitor is to his client? Are the documents concerned privileged? Would they remain privileged if, as in this case, there was a suggestion of false pretences and an attempt to deceive the Member concerned? Would it be in order for the police to ask for a witness summons with a notice to produce documents and would it be in order for a criminal court to issue such a summons?
If, of course, this kind of privilege does exist, that is an end of the matter. But let us suppose that you, Mr. Speaker, rule that it does not. Then what advice would you give on the second point about the issue of confidentiality? Should a Member of Parliament, for example, see himself as a doctor unwilling to discuss his patient's affairs or as a Catholic priest seeking to protect the secrets of the confessional?
On the third point, about the propriety of a Member giving or refusing to give evidence against a constituent over criminal charges which have arisen in part in relation to his parliamentary duties, wherein lies the balance between justice, law and order and the obvious lack of enthusiasm on the part of most Members to give evidence against their constituents? Is it simply a question of a Member using his own judgment and discretion?
In raising these issues, Mr. Speaker, I should like to make it clear that I am in no way criticising the Government Department concerned or the police. Relations between them and myself have been entirely friendly. Nor, if the crime that is alleged has been committed by constituents of mine, would I in any way wish to be seen as condoning it either directly or by inference—the more so in this case because it may be that certain

people tried, albeit unsuccessfully, to deceive me in their illegal enterprise.
I apologise, Mr. Speaker, for not spelling out the factual background in more detail, but I am sure that the reason for that will be obvious. I seek your guidance.

Mr. Speaker: The hon. Member for Luton, West (Mr. Sedgemore) gave me notice this morning that he intended to seek my ruling on these points, and he has very carefully kept to the exact wording of the note that he gave to me. Therefore, I can supply him with some of the answers.
The first question that the hon. Member asked was whether any parliamentary privilege attaches to these documents. The answer is "No". As to whether the courts might hold that the documents should enjoy qualified privilege in law, that is a matter for their concern. It is for the courts and not for me.
The hon. Member's second question was whether he owed an obligation of confidentiality to his constituents in cases such as this. I think that it would be unwise of me to offer specific advice in individual cases. There is no rule of the House on the subject, such as there is a rule of practice that certain professions have adopted, and Members must be guided by their own judgment in these difficult matters.
The hon. Member's third question was whether he was free to refuse to give evidence in a court on this matter. Fortunately, our good book "Erskine May" is able to help us here. The status of Members of Parliament as witnesses is described in "Erskine May" on pages 101 and 102, and I suggest that the hon. Member consults that passage.

GENERAL RATE (PUBLIC UTILITIES) BILL [LORDS]

Ordered,
That the Bill be referred to a Second Reading Committee.—[Mr. Tinn.]

STATUTORY INSTRUMENTS, &c.

Ordered,
That the draft Calf Subsidies (United Kingdom) Scheme 1977 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Tinn.]

Orders of the Day — JOB RELEASE BILL

Order for Second Reading read.

4.3 p.m.

The Under-Secretary of State for Employment (Mr. John Golding): I beg to move, That the Bill be now read a Second time.
I am delighted to be opening this debate. The Bill is designed to give statutory authority to the Secretary of State to allow him, at a time when unemployment is intolerably high, to pay an allowance to full-time workers, and —with some exceptions—to those registered as unemployed who are approaching the State pensionable age so long as in consequence job vacancies are created for the registered unemployed, or the competition for jobs among them is reduced.
We need the Bill to give legislative sanction to the Government's new job release scheme. This is designed to create additional opportunities for unemployed workers, particularly the younger ones, by making it possible for older workers to leave work early. Under the scheme allowances are paid to women of 59 and men of 64 in the assisted areas if they are prepared to leave work early. In the case of unemployed people the allowance is paid provided that they neither take work nor claim unemployment or certain other benefits, although they can claim supplementary benefit.
The scheme, which is new to this country—though one based on a similar principle is operating in Belgium—started throughout the assisted areas of the United Kingdom on 3rd January and is due to run until 30th June 1977. The scheme is based on the simple proposition that at a time of high unemployment it is better for older workers to take it easy and to have a well-earned rest on an allowance than to have younger people becoming more and more frustrated because the jobs just are not there for them and being forced to live on unemployment and supplementary benefits.
Let us make no bones about it: the problem that the Government face is not

that of having hundreds of thousands of working people wanting to live on the State. The problem is that of finding jobs for all those people desperate to have them. One day some Opposition Members will stop hounding those unfortunate enough to be without work.
The scheme is not only of benefit to individual workers. It can also help those employers whose social conscience prevents them from dismissing an older. less active employee to replace him or her with a fitter, stronger, younger person. In some instances—and you, Mr. Speaker, will know my fondness for great literary allusions—it will be very much a case of "new lamps for old".
The scheme offers a tax-free allowance of £23 a week for up to one year to people within one year of their statutory pensionable age—in practice, as I have said, men of 64 and women of 59—on condition that in the case of the unemployed they neither take work nor claim unemployment or certain other benefits and, in the case of those at work, that they are released by their employer, that the application is made with the knowledge and agreement of the trade union concerned, and that the employer recruits as soon as possible a full-time replacement from the unemployment register.
The new worker does not necessarily have to fill the same job. Although this scheme is often described as a job swap scheme, there is no insistence on a direct swap. We realise that when people leave, others at work may have first claim on their particular jobs. The important thing is that a vacancy is created and filled from the unemployment register.
I must emphasise that the scheme is entirely voluntary. It would be absolutely against my Department's policy for any pressure to be brought on individuals; and, of course, employers have a right to choose whether to operate this scheme.
I believe that if older workers want to stay on at work, they should be allowed to do so, provided that they are fit and that there is work to be done. Workers should be employed on their merits, regardless of their age. But, of course, some workers will want to give up work early, particularly those feeling the strain, and the job release scheme will help some of those to do so in the assisted areas.
Incidentally, my Department and the Department of Health and Social Security are sponsoring a survey into the reasons why older workers give up or carry on working. We are also considering research into the nature and extent of discrimination against older workers.
I should make it clear that those drawing the £23 tax-free allowance, and supplementary benefit if necessary, will be debarred not only from drawing unemployment, sick and injury benefits or non-contributory invalidity pension, but from receiving widow's or widowed mother's allowance, widow's pension, unemployability supplement, or invalid care allowance.

Mr. Jim Craigen: May I take it that that would not affect such matters as rent or rates rebates?

Mr Golding: That will have to be worked out with the Supplementary Benefits Commission. However, I have made it absolutely clear that there will if necessary be an entitlement to supplementary benefit. Nor may they receive statutory redundancy payments.
I turn now to the effects and cost of the scheme. The response so far has been lower than I had hoped. There have been approximately 8,000 applications, of which 1,737 from employed workers and 4,775 from unemployed persons have been approved. We had hoped to remove up to 65,000 from the unemployed register in Great Britain and up to 3,300 in Northern Ireland While these figures may not be realised, I hope that we shall not fall too far short of them.
The cost of the scheme is hard to estimate at present, but, if the targets are achieved, the gross cost will be about £73 million in Great Britain and about £4½ million in Northern Ireland. But the job release scheme will be relatively cheap to run because of the substantial savings on unemployment and other benefits, which will give us a net cost of about £27 million in Great Britain and £1½ million in Northern Ireland.

Mr. Fred Silvester: The Explanatory and Financial Memorandum refers to 78,000 applications as the target. I think that the hon. Gentleman said that it was hoped to remove up to 65,000 from the register. Will he clarify that matter?

Mr. Golding: My hon. Friend will take up that matter when he replies to the debate. I do not have the Bill to hand. I think that almost certainly the difference will be between applications and those who are removed from the register. I now have the Bill. My inspiration was correct. The difference will be between applications and those actually removed from the register.

Mr. A. G. F. Hall-Davis: This is an important matter. Is not the difference between those who will apply and are employed and those who will apply and are not employed?

Mr. Golding: That is not the point. In our estimates we have always included those who will get the allowance after having been in work and those who will get the allowance after having been on the unemployment register. The difference will be between applications and success in using the scheme to reduce the numbers on the unemployment register.
The cost has forced us to restrict the scheme to the assisted areas, which at present include just over half the total unemployed. If the scheme is as successful as we hope it will be and if we can find the necessary funds to do so, we may be able, after careful consideration, to extend it. For the moment—and I know that this will disappoint many of my hon. Friends and it will certainly disappoint hon. Members who represent Staffordshire constituencies—we must confine the scheme to the assisted areas.

Sir Anthony Meyer: On a point of information, will the Minister tell me whether, for the purposes of the Bill, intermediate areas are classed as assisted areas?

Mr. Golding: If the hon. Gentleman were to consult his hon. Friend the Member for Leek (Mr. Knox), he would tell him that the scheme specifically includes intermediate areas. If one works in an assisted area, one will be covered by the scheme. If one is unemployed in an assisted area, one will be covered by the scheme. The Bill is, however, drafted in such a way that variations on the present scheme can be made by the Secretary of State as long as certain conditions are fulfilled.
First, allowances may be paid only on a temporary basis. It is not intended that they will be paid when there is a reasonable reduction in the level of unemployment. However, the power to do so would remain in case unemployment, after it has fallen, rises again to totally unacceptable levels.
Secondly, allowances are payable only to those approaching the statutory pensionable age.
Thirdly, any scheme covered by the Bill must be for the purpose of creating job vacancies and, in the ugly words of the Bill, "otherwise mitigating" the effects of high unemployment.
The Bill is designed to allow the Secretary of State to pay allowances to workers and to the registered unemployed who are approaching the State pensionable age so long as either job vacancies are created or the competition for jobs among the unemployed is reduced. Within this framework the Bill allows variations in the conditions to be made by the Secretary of State for particular schemes. My right hon. Friend may decide on the parts of the country in which they are to be paid, the period of payment—so long as it is temporary—at what age individuals may apply, and what constitutes the level of unemployment which is so high as to justify the introduction of schemes. The Bill enables the Secretary of State to do the common sense thing and to adjust schemes to meet prevailing needs and in the light of experience.
You, Mr. Speaker, will not be surprised to learn that Clause 1(2) provides for Treasury control of expenditure. The Bill also contains two important definitions. "Voted money" makes it clear that expenditure on job release is subject to the normal procedure for approval by the House of expenditure proposed in the Annual Estimates. "Pensionable age" is defined as having the same meaning as in our social security legislation.
The Bill also provides a saving from the sex discrimination legislation for schemes for which eligibility is defined by reference to the time at which a person attains pensionable age under the national insurance scheme. As the same rate of allowance is paid to men and women for the same length of time, it is arguable that no discrimination exists. But it is

not easy to devise a scheme that runs no risk at all of appearing to discriminate against women or men. Therefore, we have decided to safeguard, for the whole life of the scheme—which is why the saving is retrospective—both my Department, which administers the scheme, and employees who participate in it.

Mr. Kenneth Lewis: Does the Minister nevertheless agree that discrimination is built into the Bill? We already have discrimination in the scheme because ladies are to he allowed to pick up whatever is available to them at the age of 59 whereas men will not be able to do that until the age of 64. Does he realise that a man might be persuaded to leave a job and that a woman may be given it? That will not help the family situation of the man, or even the young man, whom we want to employ as against the woman.

Mr. Golding: Questions of sex are very much the responsibility of my hon. Friend the other Under-Secretary of State at the Department. He has much more experience than I have of dealing with these matters, and he will take up the point when he replies to the debate. It is better to be safe than sorry, and it is a motto which, I have heard, since last Monday is to be found emblazoned in fire and brimstone on the wall of the Government Whip's office. We have included this saving to ensure that the kind of case raised by the hon. Gentleman is not brought against us in the courts.
I should add that the Bill also covers Northern Ireland, in that it provides for expenditure there on job release schemes on the same basis as in Great Britain. That will, I am sure, be welcomed in some quarters on the Opposition Benches.
The Bill is essential to provide the authority for expenditure on a scheme that is included in the Government's programme of employment measures. It is a good Bill and an imaginative Bill. It will help not only older and younger workers, but employers, and I commend it to the House.

4.21 p.m.

Mr. David Madel (Bedfordshire, South): As the Minister hinted, the background to the Bill is a dramatic increase in unemployment and a strain


on the special relationship between the Government and the TUC. The Government are in a race against time for two reasons. First, they must reduce the unemployment level before they will get anywhere near a deal on phase 3. Secondly, they are in a race to get a more effective training scheme off the ground so that many young people now out of work will have an opportunity to train for a job in industry.
The history of the Bill goes back to 3rd August last year when the Secretary of State for Environment, in announcing it, admitted:
There are substantial difficulties about the operation of such a scheme and it is not certain that practicable and cost-effective arrangements can be worked out. The Government will be consulting the TUC and CBI on the matter and will report to the House in due course."—[Official Report, 3rd August 1976; Vol. 916, c. 1443.]
That being so, my hon. Friends and I have a number of questions about the practicalities of the scheme and whether the difficulties have been overcome.
The Government proceeded in rather an unusual way in bringing the Bill before the House. They announced the scheme in detail on 24th September 1976, and applications for job release were invited from 11th November. The scheme itself began on 4th January of this year. What we wonder is whether up to that time, the Government felt that Section 5 of the Employment and Training Act, as amended by paragraph (2) of Schedule 14 of the Employment Protection Act, was sufficient for them to announce and bring forward a scheme such as we see in the Bill.
It is rather unusual to start a scheme, to invite applications, to get the scheme under way, and then to come to the House and say "By the way, may we have approval for what we are doing?". In view of the unemployment difficulties with which the Government are grappling, they ought to take a close look at the Employment and Training Act and the Employment Protection Act to see whether those measures should be amended, not least in the interests of precision, before they bring forward a temporary scheme such as this. I say that because there have been statements by Ministers, both in the House and outside, to the effect that, if necessary,

they will not hesitate to bring forward further schemes. This is rather an unusual beginning for a Bill, and the Government would spend their time well looking at those two Acts.
Halfway through his speech the Minister referred to the latest figures of applications for job release. The figures that I have, which are for 4th February, show that there had been 6,012 approvals, of which 5,026 were for men and 986 for women. Of those approvals, 4,478 applications were from people already on the unemployment register and only 1,534 from employed people. The Minister gave the figures for a week later. I think he said that there had been 8,000 approvals of which 4,775 were from people who were unemployed.
I think that the trend that one saw on 4th February is continuing; namely, that the majority of applications are from people who are already on the unemployment register. Therefore, a problem has arisen for the Government because they are dealing with two categories of people. First, they are paying individuals £23 a week to create job opportunities. Secondly, they are paying a lot of money to remove people from the unemployment register. I take it that the Government would like to see the applications reversed; that is, have more people coming forward who are employed, thereby creating job opportunities, rather than have the majority of applications coming from those who are at present unemployed.
I propose to ask a few questions for the purposes of clarification, because the House needs some more information. The Minister said that his hon. Friend would wind up the debate, and we shall therefore have a chance to hear some of our questions answered.
First, there is the matter of assisted and non-assisted areas. On 14th October last year the Minister said in reply to a Written Question:
It is not intended to extend the scheme to cover other areas of the country."—[Official Report, 14th October 1976; Vol. 917, c. 187.]
Five days later, on 19th October, the Secretary of State said:
It is not beyond possibility that we can reconsider those of our schemes which currently apply solely in development areas, to see whether we maw be justified in introducing them on a nation-wide basis."—[Official Report, 19th October 1976; Vol. 917, c. 1100.]


To judge from what the Minister said this afternoon, the Government have an open mind on whether to extend the scheme to the assisted areas. Inquiries that I have had from people in industry—managers, for example—show that they would like to know when the Government conclude their thinking on the matter of assisted and non-assisted areas.

Mr. Craigen: Do I take it that the hon. Gentleman would extend the scheme to non-assisted areas?

Mr. Madel: We have many plans for dealing with unemployment when we come to office, and I do not think that in a Second Reading debate of this kind one wants to go into specifics. My question is whether the Government are thinking of doing that. I have a further point to make. It relates to applications from the unemployment register, some of which may come from non-assisted areas.
The second principal matter that I wish to raise relates to the sum that has been set aside for payment per week—£23. In an article in The Financial Times on 4th February the question was posed whether that sum would be sufficient to attract higher paid workers—at age 59 if they are women, and at 64 if they are men. The article refers to the situation at Swan Hunter which employs about 14,000 people, of whom about 200 are eligible under the scheme for day release. Only two people have taken advantage of the scheme, and it is the view of the welfare and recruitment officer in the personnel department of the firm that the few who have shown any interest have tended to be those who are less well paid. If we open up opportunities for jobs and training, there is a query whether the sum being offered will attract a sufficient number of higher paid employees to take advantage of them.
Thirdly, there is the question of occu pational pensions and how they will be affected by taking up job release. On 4th February the Minister wrote to my hon. Friend the Member for Wallasey (Mrs. Chalker) and said:
I understand that the way in which pensions may be affected will vary considerably, depending on individual circumstances, and general advice would appear to be inappropriate. Neither the Occupational Pension Board nor the Department has therefore issued advice on this matter and we have relied so far on the guidance given in the explanatory leaflet on the Job Release Scheme….

The Minister also said that a further leaflet would be published which would mention the occupational pension position. As the Government are considering further publicity for this scheme, and, in view of the fact that the figures so far available do not suggest that the optimistic hope that 65,000 jobs will be found will be met, we need to know with greater precision how this affects occupational pensions.
Does the scheme apply to married women who have not been paying the full national insurance contribution? I mentioned earlier that by 4th February 986 women had taken part in the scheme. It would be interesting to know what proportion of married women were not paying the full stamp. There may well be many people who come into this category.
The scheme stipulates that the employer must undertake to employ someone from the unemployed register. But what happens if he fails to do so because nobody suitably qualified applies? Will there be any checks on this? Taking up the point which the hon. Member for Glasgow, Maryhill (Mr. Craigen) made in an intervention, do we assume that an employer can take someone from the unemployed register in non-assisted areas? I hope that the Minister will clarify this.
Presumably, people in the job release scheme will be removed from the unemployment statistics. In that case, the Government should admit that the number of people unemployed will not be reduced by the scheme. The Government must be realistic and honest and say that the scheme is bound to be limited.
Will small, part-time earnings be exempt from the scheme? If a person comes out of the scheme will he have to pay back what he has received, or does the allowance merely cease? I can think of cases where people who apply for job release may have a part-time job earning a small sum per week. Will that be allowed?
The Minister mentioned the Belgian experience. The Government cannot take much comfort from that because the response to the Belgian scheme has been poor—so much so that last September the Belgian Government had to extend the scheme to apply to men from the age of 60 and women from the age of 55.


The retirement ages in Belgium are the same as here.
There is one important difference between what is happening in Belgium and here and we are entitled to ask the Government's view on it. When the employer takes someone from the unemployed register under the Belgian scheme, that person has to be under 30 years of age. The Belgian experience has been that when a person opts for job release, as a result of a combination of his wage and partial unemployment benefit he is receiving about 75 per cent. to 85 per cent. of his former net wage. Even with that fact in mind the response is not very good. I do not think the Government can be optimistic about the take-up on our job release scheme.
I conclude by leaving the Government with four observations. First, as a result of job release, pressure is bound to build up on the Government to lower the retirement age. Many people see this as a forerunner of lower retirement ages.
Secondly, the Belgian experience suggests that the Government may have to consider lowering the qualifying age if they are to provide job opportunities in industry as a result of job release. Thirdly, if the Government want to improve training and job opportunities for young people, as they say they do, they ought to look carefully at whether employers should take the young unemployed off the register of unemployed to fill a job.
Fourthly, the Government say that through this scheme they want to reduce unemployment by up to 65,000 and provide more training for young people in industry. Yet many managers may feel that if people take advantage of the scheme they may have to replace someone earlier than would normally be the case. Since the take-up of job release so far is small, I suggest that the Government should talk to employers in detail about how this scheme is working. Unless there is a reasonable take-up of the scheme and unless many of the people who take job release make way for younger people going into industry, the principles and hopes behind the Bill will not be achieved.

4.36 p.m.

Mr. Jim Craigen: The scheme is already in operation as

has been pointed out and I suppose we must support a measure which aims at reducing unemployment, albeit by facilitating earlier retirement for those who wish to take up the option. However, we ought to be alert to some of the danger signals evident now in society.
We are developing into a retiring society where more and more people are wanting to opt out of industry and commerce, quite apart from the difficulties of many people, especially the young, who want to opt into the employment market. There is more evidence of people becoming browned off with the jobs they have in industry and commerce.
I am intrigued that the Minister is commissioning yet another research project to find out why people want to retire in their droves. He would learn more in a pub or a factory or by talking to folk in the street than having a team of academics producing all sorts of computer data and a report that many hon. Members will not have time to read and on which no action will be taken anyway. We have reached the stage where if I wanted to find out how many milk bottles were broken in my constituency over the last four years I should be inundated with people who could tell me that such and such a trust or bequest could give me a research grant for the purpose. However, if I wanted to employ a team of people to sweep up the broken bottles. there would be no money available. I make that perhaps incautious remark because it seems to me we get our priorities wrong about where the money should go in order to provide more employment.
As a small handrail towards earlier retirement the Bill is interesting, but it comes at a time when the Equal Opportunities Commission is scratching its head about which of four options should be taken to remove discrimination between the retiral ages of men and women. By including women at the age of 59, I wonder whether we shall not add more obstacles and difficulties to achieving the desired alignment of retiral ages for men and women.
I am glad that the Minister wants to assist more young people into employment, but I hope that he will not forget the plight of many men and to a lesser extent women in their fifties who have been at work all their lives in a particular craft or occupation and who,


because redundancy hits their industry, find themselves unemployed, perhaps for the first time in their lives. They face a considerable disadvantage when reentering the employment market. I had some experience in a personnel department years ago, and I think that particular attention should be paid to this group of people, who often fare rather badly at interviews. There is always the temptation to appoint the younger or middle-aged person.
What is to be done to strengthen and improve apprenticeship opportunities in industry? We are introducing a Bill largely designed to provide more employment opportunities for young people. What measures are being taken by the Department and the various industry training boards to facilitate young people gaining skills and qualifications at an early age? There is a group of young people who miss the opportunity of gaining apprenticeships at 16 and who, by the time they are 17 or 18, find that they are too old to pick up such opportunities.
We have already heard about the position of the assisted and development areas. I have no doubt that those hon. Members who are fortunate enough to represent non-assisted areas will feel this scheme ought to be extended to include their areas. Clearly if that were the case the scheme would cost even more money. For so long the established industries in the development areas have been contracting. There are fewer opportunities for the work force. It is in these areas that there is the highest proportion of unemployed people who have given up any idea that they might find a job but who will now be applying to take advantage of this scheme.
There has been the decision to discontinue the regional employment premium. If there is any spare cash going, it ought to go to the assisted areas to provide that extra fillip to deal with the current economic situation.
Perhaps the Minister can say a word or two about the arrangements for opting out of the scheme. It is possible that if someone decides that he wants to return to employment he would make an approach to the Department.
I said earlier that one of our problems in society is the number of people who

are eager for retirement and who after a lifetime in industry or commerce want to get away from it all. There are many retired people who would like to take on small, part-time jobs. This will become a much more pressing and important feature in our society, especially as about one in every four adults is over retirement age. That is a sizeable dependent population. It is here that we should be alert to some of the new complexities that will arise in our pensions provisions. I include here the taxation and social security arrangements.
We are all for job release and job creation if they will help to lower the unemployment figures. However, if the Minister has any researchers available, one task that they might undertake with profit would be to determine the value of work in our society and to assess the value that we are prepared to accord to it through the pay packets of those in employment.

4.45 p.m.

Mr. A. G. F. Hall-Davis: I am particularly pleased to have an opportunity of taking part in this debate because it was on 17th December 1975, in an employment debate when the present Leader of the House was Secretary of State for Employment, that I devoted the whole of what I hoped was a brief speech to advocating action along the lines now proposed. I said then that there was only one step which the Government had it in their power to take which could make an immediate and substantial impact on the number of registered unemployed. Sadly, that is as true today as it was when I said it 14 months ago. Indeed, the position has deteriorated since then.
In December 1975 the total number of unemployed in Great Britain was 1,152,000. In January of this year, including school leavers the figure stood at 1,390,000—an increase of 240,000 in 14 months. I said that action was urgently needed, but it is obvious that it is, if anything, even more urgently needed today. The value of action on these lines is that it in no way distorts the economy. It is not the creation of candy floss activity and it is not false demand that we cannot sustain. It is, instead, the exchange of voluntary retirement for resented and unwanted unemployment.


This is a modest scheme which has got off to a disappointingly slow start. I wish to give some of the reasons why I believe this to be so. I make it clear that I do not chide the Department of Employment in any way because this scheme is modest at its inception. I do not say that because, from a constituency point of view, I happen to be a neighbour of the Secretary of State for Employment. I say it because in advocating this action 14 months ago I realised the administrative resistance that there would be to such a proposal. I must be fair and say that I felt that the attitude of the Department of Health and Social Security was much less adventurous and flexible than that taken by the Department of Employment. I would not expect the Department of Employment Ministers on the Front Bench to agree with that—I might even expect them to deny it. I merely put it on the record as being my considered view.
What the scheme needs now is a "hard sell" by the Secretary of State for Employment—and, heaven knows, he has enough on his mind. Further, the scheme needs a "hard sell" by the Secretary of State for Social Services and other senior members of the Government. My hope is that this debate will put some ginger under the tails of various forces, including Tom Webster's old grey mare. The fundamental figure in this question is the four men in five who normally retire within a year of reaching their normal retirement date. This shows, despite the fact that some of them have no option, that retirement has its attractions.
I am normally a charitable and noncontroversial sort of fellow, but I feel that it is a disgrace that the only Government Back Bencher present should be the hon. Member for Glasgow, Maryhill (Mr. Craigen). This is an insult. We are discussing a scheme that could reduce the unemployment figures by 5 per cent. on the Government's own forecast. We need concerted action by the TUC, the CBI, and members of the Government. It is no good our beating our breasts about the level of unemployment if, when there are practical measures before the House, only one Labour Back Bencher takes the trouble to turn up and listen to the beginning of the debate.
I have had a suspicion from the start that there was a reluctance on the part of the TUC and the trade unions to see a scheme of this kind launched. I say that because I cannot otherwise see why they have not been pressing for it much more strongly. To my knowledge, the only trade union body which really pressed for action on these lines was the Welsh TUC, which, at its meeting last year, passed a resolution calling for action of this kind.
It may be that some trade union leaders suspect that the scheme could be used by employers to avoid their responsibility for making redundancy payments. That is the only reason I can see for reluctance to accept the scheme. But, since the trade unions have said that they support the scheme—I assume that they must have done for it to go ahead—I ask responsible Ministers to urge the trade unions to publicise the scheme and to speak in favour of it in the next few months.
I ask Ministers to address the same message to employers, too. This is an area where spokesmen for the employers can be more effective, because they can hold the key to successful action. The best support that an individual employer could give would be to outline his policy towards pensions for those who retire early. When we are facing a great crisis of unemployment and a scheme of this nature is introduced, it is not asking too much for every sizeable employer to let his workers know what his attitude will be and what financial support will be available to his workers should they decide to take advantage of the scheme.
The reason why pensions are so important was touched upon by my hon. Friend the Member for Bedfordshire, South (Mr. Madel). Unless the worker knows what will happen to his pension, the scheme will be taken up only by the low-paid and those who have little to look forward to by way of occupational benefits.
I ask the Department of Employment to talk to those arms of government which can make a contribution, particularly the local authorities. I attended a very constructive and friendly meeting with a local authority on Friday afternoon, and it


was clear that, with their main preoccupation regarding what they and I considered to be unjust treatment in the rate support grant renegotiations, they had not had time to give much thought to this scheme in relation to their own employees. The Government should ensure that the scheme is looked at seriously by nationalised industries, local authorities and Government Departments, although the latter are still too heavily centralised in London, so that there is not as much scope there as I should like.
One would have to be an actuary to be precise about whether a worker would maintain his expected pension entitlement at what would have been his normal retirement age. Presumably, it would involve the employer in about one year's normal contributions, and he would have to chip in for the employee's contribution as well. It would not be asking a great deal of large employers at least to make the same pension provision for people who take advantage of the scheme as they would make provision for people who are made redundant.
Like the hon. Member for Maryhill, I have had some modest experience in this field. All major pension schemes have some arrangement for redundancy pensions, and they fall, of course, on the employer, not on the trustees, because they are an addition to the normal outgoings of the fund. It would not be too much to ask all employers, in order to help in tackling our present unemployment problem, to deal with people who retire under this scheme in the same way in regard to pensions as they would with someone who was made redundant. I am not talking here about lump-sum payments.
There is one other extremely important point. I ask the Minister to make public the basis of the costings that have just been given to the House. I was unhappy from the beginning with the information given to me when I tried to prove how much a scheme of this kind would cost. I am not levelling my feeble darts at the Department of Employment. I believe that there is some failure in the Department of Health and Social Security to get this right.
Taking the figures in the Bill and the figures that were given this afternoon, the gross cost in the Bill is estimated

at £73 million. The net cost has been given as £27 million. It does not matter about the duration for people who are retired under this scheme. It is the ratios which count.
As far as I can see, these figures mean that £46 million is the present cost of supporting those unemployed who will move into employment as a result of people dropping out of work under the job release scheme. In other words, about 63 per cent. of the cost of the scheme is now being paid to people who are unemployed. Thus, 63 per cent. of £23 gives £14·50. Since we are being told by Government Departments that it costs only a total of £14·50 for a man or a woman to be unemployed, I have a horrid suspicion that the net cost is only taking into account the single person's basic national insurance unemployment benefit. People between 64 and 65 are much less likely to be receiving supplementary benefit. According to the figures, the number of people of that age receiving supplementary benefit is quite small. But an unemployed man with children will be getting earnings-related unemployment benefit for his dependants, and possibly supplementary benefit as well.
If we are to extend the scheme, as I hope we shall, if it is successful, it is important for the Department of Employment to be able to prove that it is costing very little or nothing at all. I still do not believe that the figures we have been given are the true figures.
If the Minister who replies to the debate will publish a detailed breakdown of the cost, I shall accept that and wait, but if he makes a general statement that the figures are correct, I shall have to ask someone close to my constituency who is in university work and better trained than I am in the art of calculation to look at the figures. I do not believe that they make sense as they are now presented.
Because of my early interest in the scheme, I congratulate Ministers at the Department of Employment. I think that they have had to fight to get the scheme—it was not, I believe, handed to them on a plate—and it must have been a pretty hard sell for them to persuade the Government. I now ask them and other members of the Government to put in an equally hard sell to all concerned to make the most of the scheme.

5.0 p.m.

Mr. David Knox: It is a great pleasure to follow my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis), whose advocacy of this scheme 18 months ago was so typical of him. I endorse what he said about the absence of Labour Members. I suspect that if we were in government, these Benches would be full for the discussion of a measure like this.

Mr. Golding: There is not much difference.

Mr. Knox: There are rather more Members on this side than on that—

Mr. Golding: Seven, as against five.

Mr. Knox: Like other hon. Members, I welcome this modest measure to help deal with unemployment. Since the present Government came to office, unemployment has more than doubled, to its highest point in the postwar era, with much social and economic suffering. It is regarded today as the most serious problem—certainly by those who live north of Watford, and I suspect by many of those south of Watford as well. The Government's record on unemployment is disgraceful and deserves the strongest possible condemnation. When nearly one and a half million people are out of work, any measure which reduces unemployment is to be welcomed, although we may deplore the fact that it has been allowed to reach such a level.
The Bill assumes about 78,000 applications from men and women over three years. Some will be from those who are already registered as unemployed; others will be from those who will vacate jobs for younger people to fill. I do not know how accurate the Government's estimate is likely to be, nor how many applications will be successful, but it is obvious from the Minister's figures that the Government are thinking in modest terms and that the Bill will merely nibble at total unemployment figures. Something much more ambitious is desirable and a much more powerful attack should be made by the Government on the disgracefully high level of unemployment.
I regret the fact that the scheme will operate only in assisted areas. I suspect that if the Minister were on this side, he would have spoken rather differently.

Unemployment, alas, is not confined to assisted areas. It is higher in some parts of the country than others, but it is too high everywhere.
My constituency is not an assisted area, so my constituents are not able to take advantage of the scheme. They find it difficult to understand why that should be so. Since this Government came to power, unemployment in the town of Leek has quadrupled and in the other parts of the constituency it has more than doubled. So, although it is true that unemployment in the constituency is less than the national average, it has increased substantially over the last three years. To the individuals affected by unemployment in my constituency the situation is just as worrying as for those who are unemployed elsewhere.

Mr. Golding: The hon. Gentleman is not correct in saying that the scheme will not apply to any of his constituents. Is he aware—I appreciate that it is an anomaly—that the scheme will apply to those in his constituency who travel into Cheshire to work as it will to those in my constituency who travel to Cheshire to work? The ones to whom it will not apply are those who work in Staffordshire and are unemployed in Staffordshire. But it will apply to many of the hon. Gentleman's constituents who travel from Kidsgrove or Talke into Cheshire.

Mr. Knox: I am aware of that point, but far from strengthening the Government's case it intensifies the feeling of being badly done by among my constituents who live and work in the constituency. I know some of my constituents feel very strongly about this. Those who live a short distance away and who travel into Cheshire to work will benefit. So also will those people who live in Cheshire. But a few miles away my constituents will not. They feel rather bitter, because there is not much difference between South Cheshire and certain parts of Derbyshire and my constituency. I hope therefore that the Government will think of extending the scheme to the whole country, so that it could have a bigger impact. All of us on this side at least would like that to happen.
One thing which is to the Government's credit is that the Bill seems a better way of dealing with the problem


of unemployment than the scheme promoted by some people for reducing the statutory retirement age by one, two or even five years. The Bill is a temporary measure to deal with a temporary situation. There are other reasons—cost is a powerful one—for not reducing the statutory retirement age, but it would be a permanent decision, which would never be changed, to deal with a temporary situation.
We all hope that the current level of unemployment will not be with us long, that it will soon revert to a level more typical of the post-war years, particularly the period 1945–65. The Bill is therefore much more useful than changing the retirement age.
Although I welcome the Bill, I deplore the necessity for it because I deplore the present excessive unemployment. The reason for our record post-war unemployment is simple-the extraordinary economic policy of this Government during their first 16 months in office, when they allowed public expenditure to explode and abandoned the previous Government's incomes policy. As a result of the latter, we had a wages and salaries free-for-all, with increases of 30 and 40 per cent. being common place, with the then Secretary of State for Employment, now the Lord President, standing on the sidelines cheering every increase.
The present level of unemployment is the inevitable consequence of that explosion, encouraged by the Labour Government in 1974 and the first half of 1975. It is the price that the British people are having to pay for the indefensible actions of the Government during that period.
Though the Bill is welcome as a palliative its necessity should be condemned out of hand because it is a consequence of the most inadequate Government this century. The job release scheme will make a small contribution towards lessening the effects of the high level of unemployment that we have today but it will not remove the affront to human dignity that will be suffered by those who are not able to work to the normal statutory retirement age. Although it will not quite be the end of the word for them, it will leave a sour taste in the mouths of some men and women who have served their country well in the past and who find

themselves unwanted and un-needed in the closing months of their working lives.
We should never forget that, apart from the social effects of the current level of unemployment, there are economic disadvantages in a situation that requires a Bill such as the measure before the House. For example, there is the waste of resources.
I have a great deal of sympathy with what was said by the hon. Member for Glasgow, Maryhill (Mr. Craigen) about this. When we all agree that we need higher output, I find it difficult to understand, as do many others, how higher unemployment or early job release strengthens the economy. Surely the economy is stronger the more we produce. Surely if those who will be affected by the job release scheme were able to stay in work producing goods and creating a larger national cake, that would lead to economic strength and enable us to get over some of the economic problems now facing us.
This modest Bill should be welcomed. It deserves a Second Reading, but in giving it one we should never forget that its necessity should be deplored and condemned.

5.12 p.m.

Sir Anthony Meyer: I rise with some trepidation to speak on the Bill. The last occasion on which I spoke on a Bill issuing from the Department of Employment—the occasion on which my hon. Friend the Member for Bedfordshire, South (Mr. Madel) spoke with such eloquence from the Front Bench—the Opposition were so successful that they destroyed the Bill. I was very sorry about that because I was looking forward to taking part in the proceedings in Committee. I can assure the Minister that this afternoon he stands in no such danger unless he goes to sleep and does not say "Aye" when the Question is put that the Bill should receive a Second Reading.
As I have now made plain, I welcome the Bill, ludicrously pathetic though it is, for reasons that have been explained by my hon. Friend the Member for Leek (Mr. Knox). It is pathetic for two reasons. First, it is to be confined to assisted areas whereas it is now all too clear that there are terrible pockets of unemployment in areas that have no sort


of assisted status. Secondly, it is inadequate because it is confined to those who are within one year of the statutory retirement age.
I am certain that there will have to be a great debate on the age of retirement. I am sure that in that debate the ludicrous anomaly of the different retirement ages for men and women will appear even more indefensible than it seems already. I am pretty certain that we shall move inexorably towards an earlier statutory retirement age.
At the same time we shall have to think much more about the provision of part-time or semi-sheltered employment for those who have retired. Fortunately, people are now living much longer. If they retire at 60, they will tend to deteriorate more quickly and lose the sense of belonging to the community unless we provide the sort of employment to which I have referred. In parallel with ideas such as the present Bill to cause people to retire early we should give equal attention to the provision of new jobs for men and women once they have retired.
Unlike a number of other Government measures purporting to deal with unemployment, at least the Bill is a direct contribution to reducing the total level of unemployment. It has been introduced at a time when evidence is mounting that Government expenditure, even when ostensibly directed to reducing unemployment, usually increases unemployment. By imposing additional costs on industry it destroys more jobs than it creates. However, the Bill is a proposal for additional expenditure of £73 million and it has to be considered with highly critical regard. We shall need to be satisfied that the £73 million that it is proposed to expand under this measure could not be better expended in some other way to create employment.
I am not totally convinced that even so selective and relatively efficient a method of reducing unemployment may turn out to be better value for money than handing back £73 million to industry so that it might use it for investment purposes.
As my hon. Friend the Member for Leek has said, the Government are having to bring this measure before Parliament largely because of the inadequacy of their attempts to reduce unemployment.

I simply do not believe in the Government's commitment—still less do I believe in the TUC's-to give absolute priority to cutting unemployment. Certainly, there is little evidence of Government interest in this Bill judging by the number of Labour Members who have come to listen to the debate.
The plain fact is that the social contract has been the great creator of unemployment. It has concealed the need to reduce consumption to release resources for investment. However it is dressed up, we cannot get away from that basic fact. The social contract has put a floor under and not a ceiling over wages. In the process, by eliminating differentials, it has destroyed incentive.
The social contract has increased the social wage. It has done so largely by increasing expenditure in unproductive administrative expenses at a time when it was sadly necessary to call a standstill in the social wage. Above all, it has produced policies of price control that have had a catastrophic effect in discouraging investment. In addition, many of the Government measures ostensibly designed to reduce unemployment have had exactly the opposite effect.
Most notable of all is the Employment Protection Act. It was designed to stop unemployment but it has had the effect of preventing employers from taking on new workers or, alternatively, driving firms into bankruptcy instead of allowing them to hang on as they might have been able to do had they been able to shed employees who were doing jobs that did not have to be done within the firm. It has prevented firms from making themselves efficient by slimming down. It has reduced many firms to bankruptcy that might otherwise have survived.
Over all, the effect of all these policies—for example, the Employment Protection Act and the load that the Government have put on employers by way of social security contributions—has been to increase Britain's industrial costs, making the British economy poorer, less efficient and less able to provide jobs.
Unlike the Government and the TUC, I give overriding priority to dealing with unemployment. I believe that there is no issue more important in British politics today. Unemployment is having a most catastrophic effect on my constituency


where the figures have doubled under the present Administration and are still increasing. In fact, they have a long way to go in that direction.
Unlike the Government, I have been frank with my electors. I have told them that there is a choice between more employment or maintaining their living standards. I have said that if they want to maintain or improve employment and cut down the number of jobless, they will have to reconcile themselves to a cut in living standards. That is what we have wanted to hear from the Government over the past two years but that is what they have conspicuously not said.
There is one phrase that causes me to shudder as much as does the phrase "slum clearance", which means driving people out of old houses into high rise suicide platforms. That phrase is "natural wastage". It means that nobody is made redundant, but the number of employment opportunities is drastically reduced. I wonder whether it would be a useful reform for the Government to turn the spotlight less on the figure of the registered unemployed and more on the total figure of job vacancies. That might give a much better indication of the health of the economy. I do not believe that there would be much comfort to the Government if public interest in job vacancies were as acute as it is in the total number of unemployed, but it would be a more useful indicator.
The Bill, unlike other measures that I have been criticising, is at least a direct contribution to reducing the number of unemployed. Moreover, it is at least neutral in the sense that it does not keep in work people who are hardly doing a job at the expense of people who are desperately trying to find a job. Much Government legislation is designed solely to protect the interests of those already in employment, disregarding the interests of those frantically seeking it. The Bill is at least blameless in that regard.
Therefore, I welcome the Bill. I hope that the Government will do a great deal more than they have done so far to make it a success. The scheme cannot be counted a success in practice, however welcome it may be on theoretical grounds. I hope that they will extend its coverage of the country and press for extending it beyond one year before retirement age. Above all, I hope that they will per

severe down this road in preference to incurring all the expense of other more highly publicised measures, such as the Employment Protection Act, which I believe to be profoundly counter-productive.

5.21 p.m.

Mr. Esmond Blumer: I believe that it is no secret that within the Department of Employment there is no great confidence that the Bill will make any large contribution to the reduction of unemployment. Some of its major weaknesses have been exposed in this short debate. The first is the comparatively low proportion of new jobs made available. If I heard the Minister aright, three-quarters of those who have applied are already on the unemployed register. It would be a better Bill if the discharge were conditional on the provision of a new job and if it were spread across the whole country.
There is little doubt that the Department's estimate was over-ambitious, just as we have heard it was in Belgium. I am not surprised. It seems to me that the benefit is too small and that the legislation is too complex.
I am not sure that the Minister has made clear whether the criterion is living in an assisted area and/or working in one. if one lives in an assisted area and cares to move out, does that mean that the benefit is lost, or if a job is forthcoming but not in an assisted area will one still qualify? There is also uncertainty about what other benefits may be forfeit.
Without doubt, given the present rate of inflation, the cash figure is too low for most people to contemplate. They will want to supplement it with other earnings. If a man goes fruit-picking for a fortnight, does he lose the benefit for that fortnight? Or does he lose it in its entirety?

Mr. Golding: Yes.

Mr. Bulmer: In that case, I am not surprised that the figures will not meet the hon. Gentleman's original expectations.
On what was the original estimate of £65,000 based? Have the 165 extra civil servants been recruited to administer the scheme?
The principle of early retirement is important. It is certain that an upturn


in the trade cycle will not by itself put our national unemployment figures right. If we were to match the productivity of our major overseas competitors, perhaps one-third of the work force would be redundant in many industries. Therefore, when the upturn comes I do not expect to see any large corresponding upturn in the number of people taken on.
Equally, as we become more prosperous it is right that people should have more leisure and, where possible, retire earlier, but we cannot forget that we have an increasingly ageing population and that the present Government have run up a huge raft of debt for the next generation which must be financed by higher output.
Let us consider who wants to retire early and who does not. My experience is that it is those in middle and senior management who want to retire, and they can do so if their pensions arrangements are made earlier enough. Those are the career openings which are perhaps most needed. But craftsmen seldom want to apply to leave early, and the rates in the Bill are not such as to tempt them to do so.
Therefore, as 1 think the Minister recognised by what he said about the sort of person to whom it would apply, we are left with a Bill for the release of those who do the most unattractive jobs. Even they, as the surveys show, are often reluctant to give up work because of the drop in living standards and the family background, and because they enjoy the company of their mates. I hope that the Government are considering these matters in much more detail. Clearly, early retirement is one possible key to the reduction of the numbers of unemployed.
The larger companies want to retire people early. Many are already doing so and are preparing people for retirement by giving them one day a week off perhaps a year before they retire and two days six months before, and enabling them to go to colleges of further education where they can prepare themselves for retirement. Far too many people look on retirement as the end and are not prepared for it.
I have a number of reservations about the Bill. First, the system has not worked in Belgium and we have not been told

why it will work here when it failed there, especially as the provisions in Belgium were far more generous.
My second reservation concerns the degree of discrimination built into the Bill. A dirty job is a dirty job, wherever it is done. A teenager's being without a job is a tragedy wherever it happens. A man feeling sick, tired or dispirited is the same whether he lives in my constituency or that of the Secretary of State. The Bill does not face up to that.
The Bill does nothing for my constituency, where unemployment has trebled since this Government came to power and there are more school leavers without a job than at any time since the war. The refusal of IDCs has meant that three major industrial expansions that might have taken place in the constituency have been forced to go elsewhere. I recently did an investigation of the 40 major employers in my constituency. Only five think that in five years' time they will be employing more than they employ now if the policies pursued by this Government are maintained.
Most recently we have lost £8½ million from the rate support grant, which means that teachers will be unemployed and places at the college of further education cannot be taken up. We are heading for the highest rates and the worst teacher-pupil ratio in the country. It is the Government who have brought this about. It seems to me that it would be much better for some of the money that will be spread about in this way to be concentrated on keeping some of the teachers in my constituency employed. Here we have needed jobs which should be retained.
The attractions of the Bill are so lacking that the Secretary of State is to spend tens of thousands more pounds going on television to explain what it is about. I question that, too, as a sensible use of public money.
The Bill is one of a series of measures introduced by the Government to tackle unemployment. But the Government seem to have no conception how to create employment. [Interruption.] At least I have some experience of creating employment. If the hon. Member for Bury and Radcliffe (Mr. White) had the same experience, he might understand why his Government are so unsuccessful and have created record unemployment.


I extend the charity of suggesting that the Government do not realise what the effect of their actions are. They have increased the minimum lending rate, pushed forward capital transfer tax, introduced capital gains tax, foreshadowed a wealth tax, imposed the highest rates of income tax in Europe and carried on with the Price Commission regardless of the effect on unemployment.
If the Government are serious about improving the unemployment situation they should realise that a transfusion of blood is little good when the Government are standing on the windpipe of industry. If the Government got off the windpipe there is a chance that the employment situation in this country could be turned round. They should look at the experiences in foreign countries, particularly at the rôle of small business in our major competitors overseas. If they look at Belgium they will find that the self-employed are able to draw unemployment benefit. That would create more jobs in this country than this Bill.
If the Government would spend more time on bolstering industry rather than on this sort of firefighting they would be more successful. But there is one job release more important than any other and that is of this Government from office.

5.31 p.m.

Mr. Fred Silvester (Manchester, Withington): I am glad that the opportunity presented by the Bill has enabled us to range a little wider and to discuss some of the problems arising from the need for early retirement. Before I turn my attention specifically to the Bill I would ask the Minister some questions about the figures so that if he needs advice he can receive it before winding up the debate. I hope it will enable him to clarify the matter because it is important that we should get this right.
From the Explanatory Memorandum I understand that we are aiming for 78,000 applications over three years at a cost of £73 million. As a result of my interruption earlier it seems that 65,000 applications will come from the unemployment register. My first question is, where will the other 13,000 applications come from?
I understand that the object of the exercise is to diminish the unemployment

register either by people coming off it directly or by substituting people on the register for someone who has actually got a job at the moment. Therefore the remaining 13,000 applications, and the millions of pounds they represent, need to be explained. I hope the Minister will do so.
Secondly, it is important to get the costings right. I do not know whether the Minister has got his sums right. The way in which the two figures of £73 million and £27 million have been given indicates that an amount of money is simply being set aside to deal with the existing unemployment payments. That sum is likely to be much higher than current estimates. It would be useful if we could have the best estimates that the Minister can give us.
A number of things should be said about the Bill. First, the Conservative Opposition see many advantages in a system which enables people to retire who have reached a point near to retirement, and who would like to retire, and for others to be put in jobs on their behalf. It has not been unusual for companies in the private sector to do this in the past. Companies have offered early retirement on reasonable terms so that they can improve efficiency, create a promotion for someone else, or do something that will generally keep the system of employment moving and more fluid. That has much to commend it.
Unfortunately, that is not the case with this Bill. I should like to emphasise what I think is the real criticism of the Bill. I hope the Minister will direct his mind to it. If we are adopting the principle that I have just described, what we are obviously doing is offering someone a sum of money in return for giving up a job. We are saying to someone "If you are prepared to retire early because of the advantages which flow to the company"—in this case to the country—"we will give you a certain sum of money". That is necessary because if someone gives up a job he will go on to occupational pension, or whatever, and is likely to suffer some loss of earnings. It is easy to understand the value of this if someone else comes into the job. But it is not easy to explain why a similar provision should be made for someone who is currently on the unemployment register.
According to the Minister about three-quarters of the people who will apply for this scheme are currently on the unemployment register. That means that only about 20,000 jobs are being moved around. The net effect of the scheme, for people who are currently out of work and looking for a job, is about 20,000 jobs. That is a tiny part of the total number but it represents a small proportion of the cost.
I shall come to the question of the non-assisted areas. But in answer to a question about the cost of extending the scheme to the non-assisted areas we were told that the net figure was £22 million. That is a lot of money. But a high proportion of the money will go to people already on the unemployment register. What the Government are doing is reducing the unemployment figure but they are not actually increasing the number of people in gainful employment.
We have a situation where a man of 64 or a woman of 59 on the unemployment register is having his or her unemployment pay increased. It will go up to £23 a week. But that person will remain unemployed just as he did before. That is a substantial part of the cost of the scheme.
On the other hand, there is no opportunity for people in the non-assisted areas to make a genuine swop even if they wish to do so. We have a situation which both the Minister and my hon. Friend the Member for Leek (Mr. Knox) described where, because of the nature of the boundaries, someone who happens to travel to work in an assisted area will be eligible while his next-door neighbour will not. That is unsatisfactory.
Would it not be better for the scheme to be national but not applied to people currently on the unemployment register? No advantage seems to be gained for the country at present by making it available to such people. Furthermore, it represents a confusion of thought. We are seeking to increase the number of job opportunities. That is what it is all about. The Minister appears to doubt that. That must be the Bill's main point. That is its selling point. It has always been described in terms of someone coming to the end of his period of work and being willing to retire and his job being made available to someone else. That is the way

in which the Bill is being sold. That is the way my hon. Friends would wish it to be sold in a tougher and more vehement fashion.

Mr. Golding: I want to make it clear that we believe that this scheme has two values. One is to make it possible for job opportunities to be created; the other, which we believe to be of great value also, as I have said specifically on at least two occasions, is that it will mean a reduction in the competition for jobs among the unemployed. We believe the latter to be of as much value as the creation of new jobs.

Mr. Silvester: I find that an interesting remark. I am sorry that when the hon. Gentleman said it before, I perhaps did not give it as much weight as I should have done. But I think that it is almost unbelievable. This scheme applies to people of 64 or 59 years of age. The Minister talks about a weight of demand for jobs among the unemployed as though they were one lump of people looking for the same job. But people at 64 or 59 are not in the same sort of employment bracket as those who are younger and who are the sort of people we are seeking to help. The proposition is unrealistic. Perhaps the Minister can tell us, if it can be measured in some way, what likelihood there is of people of 64 and 59 on the register getting the same types of job as younger people. The fact is that these older people, however desirable it may be for them to get a job, are much less likely to do so, and are less likely to be looking for the same type of job as younger people, but this scheme will top up their continuing unemployment pay to a higher level.
My hon. Friend the Member for Flint, West (Sir A. Meyer) said that we were having a large sum of money made available because of the high unemployment situation and that we are trying to find ways to alleviate that situation. He suggested—and he may be right—that the money might be better spent on a scheme which made it easier for people to invest. I think that the scheme as outlined, apart from the aspect dealing with the unemployed, is a useful contribution, and therefore I suggest that some of the money should be spent on it. But we do not want to waste money, and if a large part of it is to go towards reducing the pressure of people looking for jobs, and if


it goes on the 64 and 59 age groups, that is unrealistic and absurd.
This proposition is likely to have arisen because the Government think it fairer to do it this way, but I do not think that it is fairer. Fairness lies in a situation where the Government can produce a certain amount of money and a certain number of jobs, and it is up to the Government to do it in the most economic way possible. I asked for the Government's figures, but in the meantime I will use my own, and I am sure that they will not be very different. My sums indicate that the cost of doing this will be about £1,350 a job if one reckons on 20,000 jobs and leaves aside the unemployed. That is not very different from the sum we have been paying out in the form of aid for the creation of a new job, but this is not producing a new job. It is merely a swapping of an existing job.
In other words, we are paying the same amount of money for swapping a job from an older man to a younger man as we are in other forms of industrial aid for creating a new job. One must ask whether that is the most intelligent use of the money. We could reduce the cost considerably if we were to leave aside the unemployed, and here I want to take up another point put by my hon. Friend the Member for Flint, West. The Minister has denied that this is about job opportunities, but to most of us—

Mr. Golding: I did not say—and the hon. Gentleman can verify this in Hansard tomorrow—that it had nothing to do with job opportunities. I made it clear that there are two purposes—the first to create job opportunities, and the second, of equal importance, to reduce the competition for jobs amongst those who, unfortunately for them, are unemployed. The hon. Gentleman is doing a disservice to the argument by misinterpreting it.

Mr. Silvester: I accept that rebuke. It was a slip of the tongue. I accept fully that the hon. Gentleman said that job opportunities were one of the two purposes. The balance is 75 per cent. to 25 per cent.—although we will not argue about that. But to us and to most people outside, the real value of the scheme will be judged in so far as it gives rise to greater job opportunities, for the reasons I have advanced.
My hon. Friend the Member for Flint, West was talking about this in the context in which he finds himself. He and I, who represent a Manchester seat, are looking for circumstances and schemes, to which we are prepared to give our full support, which will take some of the people looking for jobs off the register in the most cost-effective way possible. When the Government do something which has that effect, that is fine, but every time they do something which has that effect but at a cost which is above the sensible cost, they are doing harm to other people.
What we have to look at here is the job vacancy situation, which is the true measure of the extent to which the Government's policy will succeed. If one were a true cynic, which I am not, one could make the case that the whole purpose of the Bill was simply to reduce numbers, and if the numbers which the Department was able to put out month by month appeared to be down by 75,000 by sleight of hand, everyone would say "They have done a good job", although the true figure was about 20,000 workers. I do not think that that is the Government's intention. I think that the reason for the inclusion of the unemployed in this Bill is to create a sense of fairness.
The hon. Gentleman says that the unemployed are most unfortunate, and I agree. But since we are talking about the best possible use of a limited amount of public resources, I urge him as strongly as I can to ask himself whether what he proposes as far as the unemployed of 64 and 59 are concerned is the wisest possible use of money. It can be looked at from three aspects. It is deceptive, because people will imagine that unemployed persons are getting into work when they are not, it is unfair because the Government are denying the use of these resources to make jobs for other people, and it is expensive because it costs a lot per job and the Government are not actually making but only swapping jobs. Whichever way one does it, whether in terms of deceptiveness, fairness or expense, the inclusion of the unemployed is a major fault of the Bill.
We have debated, and will debate again, the necessity for the Bill. The fact that we give it our support as a small measure to alleviate an impossible situation does not mean that we now


or shall in the future cease to criticise the Government for having created that situation.
We are faced with an unemployment situation that was the direct result of the Government's activities in their first 18 months of office. They have since demonstrated a total inability to recover from that dreadful position. We shall support them in such schemes as this where we think they will be of benefit to those who are currently suffering from the results of that policy. I hope that, in return, the Government will not expect us to cheer them for having got us into this position in the first place.

5.50 p.m.

The Under-Secretary of State for Employment (Mr. John Grant): We have had a wide-ranging debate on a Bill which is of a length that belies its importance. It was pleasing that the merits of the job release scheme which are given statutory cover by the Bill were so readily appreciated by most contributors to the debate.
The scheme is an imaginative one. It seeks to give individuals freedom of choice in deciding whether to leave their jobs, and it seeks to create fresh job opportunities, particularly for younger workers whose talents are otherwise frustrated. The House recognises the gravity of the unemployment situation as it affects young people. The Bill is a flexible measure which creates a framework within which schemes can be mounted and aimed at a carefully defined target.
The hon. Member for Manchester, Withington (Mr. Silvester) asked whether we were employing these resources in the wisest possible way. Obviously we think that we are employing them wisely or we would not have introduced the Bill.
I shall try to reply to as many points as possible, but if I miss any matters that require to be answered I give the undertaking that we shall carefully consider all the points made in this debate. There have been some helpful and constructive speeches.
The hon. Member for Bedfordshire, South (Mr. Madel) asked me to deal with a whole series of points, and I shall try to cover as many as I can. He asked about the possible use of the Employ-

ment and Training Act 1973. I am advised that it would not be possible to use that legislation.
Section 5 of the 1973 Act contains powers for my right hon. Friend to make arrangements to provide temporary employment for people who are unemployed. That Act was amended in 1975 by the Employment Protection Act to provide further powers to cover schemes such as the temporary employment subsidy and the youth employment subsidy, which are now in operation. All these powers are concerned with the creation or maintenance of jobs. They are not designed to cover a scheme under which payments are to leave jobs. Under job release, job vacancies are created indirectly rather than directly. Therefore, new statutory powers for these payments were necessary.
By the same token, there was nothing to be gained from amending the 1973 Act. The new powers which we require do not fit easily into Section 5 of that Act, and separate legislation is the sensible and straightforward answer to the problem.
The hon. Gentleman mentioned the operational difficulties and referred to my right hon. Friend's admission last year that job release might not be easy to operate. We did not wish to mislead the House with a rash promise to introduce a scheme without the necessary detailed consideration. We were also anxious to devise a scheme that would be simple to operate. In the event, we were able to work out a scheme and to announce it at an early date. The mechanics of the scheme are working well.
I was also asked about the level of the job release allowance. The figure of £23 is based on the average of related benefits. An allowance calculated in this way will be unattractive to some people, but there will be those who will wish to take advantage of the scheme to give up work early. That is already happening. They may want to take such a course for domestic or health reasons. We hope that a reasonable number will take advantage of this facility. We are disappointed at the immediate response, but these are still early days. As the scheme works and becomes better known, no doubt we can look to an upturn in numbers. I confirm that we would like to see more people coming forward from employment.


That would be a helpful development. I shall return to that matter shortly, but I wish to emphasise that if people can be taken from the unemployment register it will reduce the competition for jobs. We regard that as an important element in the situation.
The hon. Member for Bedfordshire, South asked about the effect of the scheme on occupational pensions. We are ensuring that the leaflet describing the scheme will, when it is reprinted, include information on this subject. It is not easy to give definitive guidance on this matter. What can be said is that the receipt of an occupational pension will not affect a person's entitlement to job release allowances. Whether participation in the job release scheme will affect a person's entitlement to his occupational pension will depend on the condition of his particular scheme.

Mr. Madel: When will the leaflet be reprinted?

Mr. Grant: I cannot give that answer this evening. I undertake to write to the hon. Gentleman quickly on the point.
The hon. Gentleman also asked whether small part-time earnings would be exempt. The answer is that they will not be exempt, except perhaps as to honoraria. Applicants must undertake not to engage in any part-time employment or business on their own account. That is one of the conditions of the scheme.

Mr. Kenneth Lewis: On the topic of part-time earnings, the pension rules give people the opportunity to earn part-time sums up to a certain amount without the requirement to pay tax. If the rule in this instance is to be tightly drawn, will it affect older people who now undertake part-time jobs that are modestly paid, and will it affect their pensions?

Mr. Grant: This is not a pension scheme. I note the hon. Gentleman's point, but we must have some reasonably firm demarcation line. It would be difficult if we were to open the door in the way the hon. Gentleman is suggesting.
On the subject of opting out, anybody can withdraw from the scheme at any time by giving two week's notice in writing to the Department of Employment. Allowances properly paid are not

required to be refunded, but any sum paid to a person who does not satisfy the conditions for receipt of the allowance—for example, if he starts work and claims unemployment or sickness benefit—would have to refunded, but not otherwise.
The hon. Gentleman also referred to the article in the Financial Times and quoted an example involving Swan Hunter. He was a little selective in his quotation because the article also referred to a case involving Rowntree-Mackintosh, which company, the article said, considered the scheme to be "acceptable as it stands". The article went on to give a different picture and indeed a more balanced account than was the hon. Gentleman's interpretation. However, I do not wish to make heavy weather of that.
I hope that I have dealt with most of the points mentioned by the hon. Member for Bedfordshire, South, but if I have left anything over I shall write to him.
My hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) asked whether payments would affect entitlement to rent and rate allowance. The answer is that the job release allowance would be treated in the same way as any other income when rent and rate rebates are assessed by local authorities, and when the Supplementary Benefit Commission assesses entitlement to help with rent payments.
My hon. Friend also referred to tho difficulties of the Equal Opportunities Commission in deciding the best way of removing discrimination in respect of the State pension scheme. The Occupational Pensions Board has also contrived to grasp this nettle, but it is a measure of the difficulty involved that these bodies have not yet come up with any answer. I do not accept that the use of different ages for men and women in the job release scheme will make it more difficult to reach a solution in due course. Meanwhile, within the framework imposed by social security legislation we have done everything possible to achieve equal treatment for men and women.
All of us who have had the pleasure of serving on Committees with the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) know how constructive his contributions usually are, and that was


the case today. He referred to the hard sell that will be necessary, particularly the hard sell that the Government might undertake with employers. The Secretary of State will shortly be approaching employers directly to ask specifically for their co-operation in the scheme. I agree that there is a need for that. I assume—although I cannot give an assurance today—that that reply also covers the points that were made about local authority and nationalised industries.
The hon. Member also raised the matter of costing, as did the Opposition spokesman. There is nothing to hide in the method that the Government used in reaching their conclusion, and although I cannot give details now, we shall write to both hon. Members to spell out the details.
Several hon. Members referred to the more general matter of early retirement. I ought to stress that the job release scheme was designed for the specific purpose of allowing workers to free their jobs for younger unemployed people and to cut down intense competition for jobs at a time when unemployment is high. The Bill makes it clear that job release schemes can operate only at such times. The scheme is not a way of reducing the normal retirement age. That would be a more fundamental and far-reaching change. If male retirement were cut to the age of 64, the additional cost would be £340 million a year. Even if that money were available, it would have to compete with other claims for public spending, and we all have our own priorities. The job release scheme is not designed to deal with and does not pave the way for such a reduction.
I now come to the speech made by the hon. Member for Withington. I have dealt with the matter of costing, but there has been some confusion about the estimate for numbers and spending on the scheme. I shall try to clarify the matter. We estimate that about 78,000 people will take advantage of it, but allowance must be made for employers not finding it possible to replace workers who have left and, in some cases, employers simply failing to do so. We are keeping a check on that, but some employers may not replace such workers. Allowance must also be made for those who go back to work. We thought that 65,000 people

might be removed from the register of unemployed.
Throughout the debate references have been made to the overall unemployment situation and the reasons why schemes such as this have had to be introduced. The House has discussed this subject many times, and I do not want to spend long on it, except to say that there are no glib answers, but that if we stick to the policies of the social contract and the Government's industrial strategy we can achieve a great deal.
The short-term problem is immense, but we must recognise that since the 1975 Budget the Government have made more than £600 million available to create or keep open more than half a million jobs and training places. Accordingly, while there is much more to be done, the House cannot write that off as chicken feed. I therefore say, particularly to the hon. Member for Kidderminster (Mr. Bulmer). who dwelt on public expenditure. that incessant demands are made by the Opposition for large cuts that, as a deliberate act of policy, could only add to the total of the jobless.

Mr. Bulmer: My point was about the distribution of the rate support grant, and not about the cut, per se.

Mr. Grant: I am sure that the hon. Gentleman is concerned about redistribution, but Opposition Members do not like it when the redistribution affects their own areas, although across the board they want substantial cuts.
The House should appreciate the figures. In June 1973 there were 22 million people in employment, as opposed to 544,000 out of work. In June 1976, the estimate was that there were just 185,000 fewer people in employment—that is almost 22 million people in jobs, but the unemployment figure had risen to 1,277,000—an increase of 733,000. Some hundreds of thousands more people will be seeking jobs over the next five years and coming on to the labour market, because of the higher birth rate in the late 1950s and early 1960s and because of the increased number of married women taking up employment. These are facts that the House should recognise.
I want to make a partisan point that turns on what was said by the right hon. Member for Leek (Mr. Knox) about unemployment in his area. My hon. Friend


the Under-Secretary of State for Employment was there today and was able to announce that the level of employment in North Staffordshire is now lower than at this time last year. That should give some limited encouragement. The hon. Member for Leek made a strong party political point about the effect of the wages explosion on unemployment, and dwelt on that at length. It is now essential to renew the social contract, and most of my hon. Friends are agreed on that. I am glad that one Opposition Member is nodding his head, because at the weekend the Leader of the Opposition made a speech to the Young Conservatives Conference that was an exhibition of sheer political cowardice. She made no reference to this whatsoever, and I would have thought that instead of shaking their heads hon. Members on the Opposition Benches should be pressing upon her the need for such policies.

Mr. Knox: I have supported both phases of the Government's incomes policy, but I have criticised and will continue to criticise the Government for dispensing with the previous Conservative Government's incomes policy and for having encouraged the massive wage and salary increases of 1974–75 that caused all the trouble.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): The hon. Gentleman must make his remarks relevant to the Bill.

Mr. Grant: I thought that you might feel that, Mr. Deputy Speaker. I should be delighted to deal with the point, but will not do so in view of what you have said.
I think that hon. Members on both sides of the House have recognised the significance of job release in the Gov-

ernment's programme of employment measures. It is an essential and worthwhile element in the programme that we have mounted to counter the trend in unemployment that we share with many other industrialised countries— though if one looks at the developing world, one sees that our problems dwindle into insignificance. The Government's programme is on an unprecedented scale. Since 1975, more than half a million jobs and training places have been created. That represents a major effort to relieve the effects of an appallingly high level of unemployment.
The Bill will give the Secretary of State the authority that he needs to finance the job release scheme that the Government have already made available to those workers who wish to make use of it. The scheme is a valuable one and it is clearly right that it should receive statutory backing.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Snape.]

Committee tomorrow.

Orders of the Day — JOB RELEASE (MONEY)

Queen's Recommendation having been signified—

Resolved,
That for the purposes of any Act of the present Session to provide finance for job release schemes, it is expedient to authorise the payment out of money provided by Parliament of any sums required for paying temporary allowances to persons approaching pensionable age, under Schemes made and implemented with a view to creating job vacancies and otherwise mitigating the effects of high unemployment.—[Mr. Snape.]

SOCIAL SECURITY (MISCELLANEOUS PROVISIONS) BILL

As amended (in the Standing Committee), considered.

New Clause 4

REVIEW OF EARNINGS RULE OPERATION.

"The Secretary of State shall review the operation of the earnings rule for retirement and invalidity pensioners and their spouses and the cost of its abolition, including the extent to which it acts as a disincentive to work, and shall lay a report on his review before Parliament by 31st October 1978."—[Mr. Patrick Jenkin.]

Brought up, and read the First time.

6.10 p.m.

Mr. Patrick Jenkin: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): With this, we may take Amendment No. 4, in Clause 4, page 6, line 19, at end insert—
(3) In section 30 of the principal Act, there shall be inserted after subsection (1) the following subsection:
(1A) With effect from such day as may be prescribed in the week containing 6th April in a year mentioned in the first column below, subsection (1) above shall have effect with the substitution for the words 'years' of the words specified in relation to that year in the second column below—


1977
…
…
…
'4 years'


1978
…
…
…
'3 years'


1979
…
…
…
'2 years'


1980
…
…
…
'1 year'


and with effect from such day as may be prescribed in the week containing 6th April in 1981, subsection (1) above shall cease to have effect."'.

Mr. Jenkin: We have reached the Bill a little earlier than we anticipated, but that is no bad thing, because we have a great deal of business to get through, although, looking at the empty Benches in the House, perhaps our business will not take us that long.
The amendment being taken with the new clause is in the names of hon. Members of the Liberal Party, who are conspicuous by their absence, but no doubt we shall have the pleasure of their company later in the proceedings.
In Clause 4, we come back to the vexed question of the earnings rule for pen-

sioners and the wives of invalidity and retirement pensioners. We make no excuse for returning to it, even though probably more time has been spent, more ink poured out and more frenzied and inaccurate calculations have been made on the earnings rule than on almost any other social security topic.
It is right to return to this subject because whatever may have been thought right when the National Insurance Scheme became law in 1946, it is clear that the earnings rule has never been accepted by the people of this country and that eventually it must go. It is seen on all sides as very unfair.
For example, a man may collect his full pension when he has substantial savings income, but if he earns a wage his pension is reduced. The rule is a considerable disincentive, because the rate of imputed tax can reach 100 per cent. and the wives of invalidity pensioners can suffer a rate of imputed tax of 135 per cent. The more they earn within the band, the less money they have to spend. It is for such reasons that the rule is bitterly unpopular, and must go.
We have come a remarkably long way in two years. Just over two years ago, the earnings limit was £13 a week. It has increased progressively, first to £20 and then to £35. In the Bill, it is £35 dynamised—a dreadful expression, which means that it will be uprated in line with the movement of earnings.
Credit for this transformation—and many millions of people no longer suffer the impact of the earnings rule—must go to the House of Commons, led by the Opposition, with the Government reluctantly trailing along behind. At each stage, improvements have been achieved in the teeth of opposition from the Government, but the House, perhaps wiser than the Government, has insisted upon these notable improvements. I am pleased to see that the hon. Member for Rochdale (Mr. Smith) has now joined us.
The second achievement of the House is that we have got it clear—and this applies to all parties—that it is our objective to abolish the earnings rule as soon as resources allow. We have also got the Government, after being hammered time and again on the figures which they used to try to resist earlier improvements,


to admit that what we argued all along was correct and that their figures were entirely wrong.
They have made fresh estimates on a new basis of the cost of raising the earnings limit, and in Committee we had an important 15-page paper circulated to us setting out the Government's argument. It was typical of the Government that this complicated and convoluted paper was not circulated until the night before the Committee was due to meet. Indeed, some hon. Members did not receive it until the morning of the Committee, and we had to adjourn to allow hon. Members to absorb the information.

The Minister for Social Security (Mr. Stanley Orme): The right hon. Gentleman might be good enough to give some credit to the Government for having circulated the paper—which was a departure from usual parliamentary practice and one which, I should have thought, was to be welcomed.

Mr. Jenkin: The right hon. Gentleman jumped up too soon. The paper was greatly welcomed. I shall not quote what I said at the time, but we regarded it as an immensely valuable exercise in open government, and the Minister can see its effect by looking at the Order Paper.
We may take some credit for having put the Government on their mettle. I said on Second Reading:
If the Government can convince me that £60 million or even £45 million is right, then it is right for us to look carefully at the whole question. If not, it is right to stick to the decision which the House took last year."—[Official Report, 2nd December 1976; Vol. 921, c. 1205.]
The Government were proposing to claw back the earnings limit from £50—which the House approved in 1974–to £35, which would be uprated in line with earnings. That is the level at which it stands at present. I took a highly responsible attitude; to some of my colleagues it was perhaps a little too responsible, but when the overriding need is to save public expenditure it cannot be right for us to oppose cuts simply for the sake of cheap popularity. However, we shall oppose cuts if they undermine the whole principle of the National Insurance Scheme, as did the original clause dealing with unemployment benefit for pensions. We

shall not oppose changes that leave the principle intact while delaying highly desirable, but, in the last resort, not vital, reforms.
In Committee, we voted against Clause 4(1) partly to voice our general dislike of the earnings rule and partly to keep the matter open for the Report stage. The Government's paper had to be studied, and consultations were necessary. We have had time to look at the paper again, and we have not tabled official Opposition amendments to the clause. We do not intend to oppose what the Government are doing.
Clause 4 contains the biggest savings in the Bill, which was introduced expressly to save on public expenditure. The Government tell us that they expect savings of £60 million gross and £45 million net in 1977–78. Even if the savings turn out to be only half that, it is still right for us not to oppose them.
It is worth examining the Government's case, because we need to be satisfied that we are right in taking our highly responsible view. The Government give as the main argument in costing the reduction of the limit from £50 to £35 that if it were not reduced, many people currently at work and deferring their pensions would take them and continue to work, adding their pension to their earnings. They estimate that the cost of this in 1977–78 would be £38 million. In addition, there is the loss of national insurance contributions and the cost of the Treasury supplement—just under £5 million. An allowance is made for smaller reductions in the pensions of those who earn just over the limit. Taking this as £2 million, the Government come to gross savings of £45 million.
They then argue that there is a second element—the cost of paying the extra adult dependants' allowance for the wives of invalidity and retirement pensioners, which they estimated at £15 million. That sum, plus the £45 million, gives a total of £60 million. However, the Government concede that there will be an extra tax yield of £15 million, which gives a final figure of £45 million.
In previous debates we have argued that the basis of calculation of these figures was wrong and misleading. We argued that they were always changing


and that the Government could not produce two consecutive estimates that gave the same figure. The Government have never taken into account the increased earnings of pensioners who found that with the limit raised they could earn more while still keeping their pension. If they earn more there will be a higher tax yield.
We could never accept the Government's figures for those who would defer retirement when the earnings limit was raised. There is powerful reinforcement for those doubts. Last year the figures given to a number of hon. Members in a series of written replies seemed to show that when the limit went up from £20 to £35 the numbers deferring retirement, instead of falling, rose from 120,000 to 135,000. Fortified by those figures we were convinced that it would be right to allow the limit to be raised to £50, in accordance with the decision of Parliament two years ago. We were building on the basis of those figures to construct a convincing case that the cost of raising the limit was, at the most, small and might even represent a saving if one examined the effect on the insurance fund and the Exchequer together.
The Government have now admitted that their figures were wrong. Paragraph 2 of the circulated note reads:
the assumptions have been altered in a number of important respects from that used to provide earlier estimates, in the light among other things of experience with changes in the limit in recent years.
One could quote many examples of back tracking by the Government. Confession is good for the soul. I hope that there will be some burnished souls as well as red faces in the Department.
Up to 1974 the figures for deferrals were reasonably reliable, because they were based on the records of the weekly flat rate insurance contributions. From 1975 it was no longer possible to sample contribution payers, since contributions were earnings-related and were collected and recorded annually. At that time it ceased to be possible to estimate deferred retirements by reference to contributions. Therefore, all the figures for 1975–76 had to be based on guesses. A new method has been worked out, and the Government claim that it shows higher figures for pension deferments for earlier years

and a sharply falling trend of deferments as the earning limit has increased.
In November 1974 the figure for deferments was 218,000. The earnings limit then went up from £13 to £20 and the number of deferments fell to 182,000. In March 1976 the figure was 180,000, when the limit went up again from £20 to £35. The Government now claim that the number of deferments has fallen from 180,000 to 135,000. If that is right it is a powerful reinforcement for their case that substantial additional costs will be involved if the limit is raised to £50 in April.
The Under-Secretary of State reinforced his case in Committee, when he said:
This new data source is shown to be a reliable indicator of the numbers deferring retirement".—[Official Report, Standing Committee A, 18th January 1977; c. 282.]
Earlier in the Committee he said that the system had been checked against earlier known figures and found to be very accurate.
That is a powerful case, but it is not the complete case. One has to ask how convincing and reliable is the new method and how much faith can be put on the savings that the Government have claimed. If one goes back further in time and examines the position between November 1973 and November 1974, when the earnings limit was raised from £9·50 to £13, one finds that the effect on the number of retirements that were deferred in that period was virtually nil. In fact, the number went up a little, from 213,000 to 218,000. That does not appear to be a powerful reinforcement of the Government's case.
The matter does not stop there. Between November 1974 and March 1976, during which time the earnings rule was eased to £20, deferred retirements fell by 38,000. That is the heart of the case. One could say that all of that trend, or even the whole of it, can be attributed to the worsening economic situation. The Government have recognised that that is a factor that must be taken into account. In paragraph 7 of the circulated document they state that
It was assumed arbitrarily that even if the earnings rule limit in 1977–78 remained the same in relation to average earnings as in 1976–77, the number deferring retirement would fall by 10 per cent. to 122,000–90,000 men and 32,000 women—because continuing high unemployment will restrict the number able to


continue in work beyond minimum pension age, and because of an assumed continuing slight trend towards voluntary earlier retirement.
Apart from any movement in the earnings rule, about 10 per cent. of those deferring retirement would cease to do so, for the reasons that have been spelt out. If that is applied to the period between November 1974 and March 1976 it produces a fall in deferred retirement of about 28,000. That shows that 28,000 out of 38,000 owed nothing to the earnings rule but to high unemployment and other factors. On that basis the most that could be attributable to the earnings rule is about 10,000.
The case could be stronger than that. The fall in deferment may be more than 28,000 and the earnings rule change would have had a small effect, if any. That was the case made out by my hon. Friend the Member for Rushcliffe (Mr. Clarke) and Mr. Christopher Mockler in their pamphlet, in which they showed, on the basis of past figures, that the Government could be out by a factor of 50 per cent. from what they had earlier expected. If that is right, the cost of raising the earnings limit to £50 may well be overstated by as much as £15 million, or even £20 million, on this factor alone.
6.30 p.m.
However, the matter does not stop there. Taking the latest period for which we have figures, from March 1976 to the autumn of 1976, the Government say that the number of deferred retirements has fallen from 180,000 to 135,000, which is a very substantial fall indeed. However, on looking at the paper, one finds that the Government admit that this drop
should be regarded as provisional and subject to revision when further data become available.
Therefore, one is entitled to be very sceptical about the figure of 135,000, and the number may well be revised upwards, perhaps to 140,000 or 150,000, or even 155,000. Taking all that together, I really question whether, even now, on the basis of the Government's latest paper, the estimate of £38 million attributable to deferred retirements is right.
But that is not all. There is another weakness still in the Government's case. One of the document's more ludicrous arguments is that high taxation—that is, income tax plus the earnings rule—is an

actual incentive to work, and that if taxation is relaxed not only will people take no advantage of this relaxation but they may even work less, as their net income would be unchanged. That is spelt out in paragraph 15. I shall not read it all, but I should like to read a bit of it:
We have no evidence, however, for supposing that more than very small numbers are able to control their earnings in this way, and it seems unlikely that pensioners are going to work longer hours for more pay as a result of upward changes in the limit. In fact the reverse could apply, in that if full, rather than partial, pension were payable on top of earnings it might encourage some elderly earners to reduce their earnings since less effort was required to maintain their standard of living.
I am bound to say that that is a perverse argument, which cannot really stand unchallenged. All experience and common sense suggests that high taxation operates as a severe disincentive to work. One's view of that as common sense is not displaced by the fact that the Chancellor of the Exchequer happens to agree with it. He has admitted that high levels of direct taxation are a disincentive and that tax must be reduced. We are told that he will reduce taxation in the Budget. He was referring to a tax rate of 35 per cent., or perhaps 41 per cent. with national insurance, and the middle management tax rates. However, as I have said, here we are talking about a 100 per cent. tax, or even, in the case of wives, a 135 per cent. tax. To try to argue that there will be no disincentive to work is absurd. What we do not know is what the effect would be.
My hon. Friend the Member for Rushcliffe has pointed out that there are about 500,000 retirement pensioners in work and within the earnings rule age bracket, yet only 5,600 of them actually come above the £35 limit. Is it suggested that the tiny percentage owes nothing to the disincentive effect of, first, the 50 per cent., which is really 85 per cent., and then the 100 per cent.? Clearly, some explanation is needed why this enormous disparity exists between the 500,000 and the 5,600. We have not yet had that from the Government.
It is true that many elderly people will wish to work only part time. It is true that many do not control the amount of work that they can do. However, it cannot possibly be right to argue that


this has no effect, that there will be no additional tax yield as a result of people working longer hours. I do not need to assert that myself or to quote my hon. Friends on the subject. The late Brian O'Malley did not seriously deny this. On 29th January 1975 he admitted that
if the earnings rule were abolished numbers of people who in present circumstances might well retire would not then retire."—[Official Report, 29th January 1975; Vol. 885, c. 469.]
That being the case, they would go on earning and they would pay tax, and that is an offset.
On 29th January 1976 The Times said
It is impossible to give the precise net cost to the Exchequer because nobody can be sure how many pensioners would earn more if this disincentive were removed and how much extra would therefore be paid in tax.
One could call in aid the Liberal Bench. Mr. Michael Fogarty, who is, I believe, a supporter of the Liberal Party, wrote in his recent publication "Pensions—Where next?",
When account is taken of income (but not indirect) tax paid on earnings…it is a fair guess that the cost of abolition would indeed be covered.
I think that that is putting it much too high, but clearly there is some offset here for which the Government have allowed nothing. Indeed, if the limit went up to £50 and only 60,000 people took advantage of it to earn an extra £15 a week, the extra income tax revenue would be about £16 million. That factor must be taken into account.
There is one other factor of which the Government must be aware. Quite a lot of pensioners conceal what they earn in order to avoid the effect of the earnings rule. If the limit is raised, they have less incentive to do that.
There is, however, a third doubt about the Government's figures, and it relates to the question of working wives. What we now know from the document—and this is a very major disclosure—is that the Government are simply assuming—they do not know— that 85,000 wives of invalidity and retirement pensioners are in work, and that because of the earnings rule their husbands are not claiming dependancy allowances. The document states that

no actual statistics are available of the numbers of married retirement and invalidity pensioners who are not receiving an allowance for an adult dependant because their wives' earnings exceed the limit under the earnings rule.
That is a crucial admission. It again calls into question whether the Government are right in putting an extra £15 million as the savings which could be achieved by this factor.
I cannot believe that the right hon. Gentleman's Department is happy with this assumption. The figures are pure guesswork, because the Government do not know how many wives are living apart from their husbands and hence are unaffected by the earnings rule. If the number living apart proved to be 40,000 higher than expected, the so-called savings on raising the earnings limit would be halved—from £15 million to £7½ million. The Government do not know whether those 85,000 wives are actually in work or how much they are earning. The Government do not know the number of wives who have national insurance benefits in their own right—for example, unemployment, sickness or invalidity benefits—and thus are ineligible for the dependancy allowance.
In short, the Government know nothing, but are simply guessing a great deal. Indeed, if the various disablement organisations are correct, it seems more than likely that the Government have yet again on this occasion overstated their case and that the true saving is nearer, say, £5 million or £10 million than the £15 million suggested in the note. So we have three major points of uncertainty. We do not know whether the number of deferments fell to 135,000 in November; we do not know what the extra yield from additional earnings will be; and it is pure guesswork what the effect on the wives of invalidity and retirement pensioners is.
Some people might argue that given all these doubts we should be well justified in insisting on keeping what Parliament decided in 1975–a provision that the earnings limit should rise from £35 to £50. However, I do not think that, in today's circumstances, it is right to oppose expenditure cuts simply because one can raise doubts, albeit serious doubts, about the validity of the cuts intended to be achieved. The need to cut public spending is so pressing and


so immediate that if there is a reasonable prospect of achieving even some of the savings aimed at—the Government's figures show that there is a reasonable prospect that part of the savings will be achieved—in the absence of overriding argument to the contrary it would be wrong for me, speaking at this Dispatch Box, to oppose them. Still more—I have to say this with some grief—would it be wrong for us to support an amendment that committed the Government to rising expenditure over the next few years, as the Liberal amendment certainly does.
The Government have been very helpful and have given figures, in an attachment to a letter to the hon. Member for Islington, South and Finsbury (Mr. Cunningham), which show, as I understand it, that the effect of the Liberal amendment would be to add £12 million this year, rising to £27 million next year, then to £46 million, and then to £74 million, and finally, by easing the rule for retirement pensioners altogether, to £118 million. Those are cumulative figures. I do not think that it would be right to do that. I find it difficult to believe that the Liberal Party, which, after all, joins us in arguing that there must be reductions in public expenditure, can be seeking to commit the Government to that additional expenditure.
We now have the position that the earnings limit will move in line with earnings. It is now £35. By next November it could be £41 a week. Compared with the £13 a week, which it was a little over two years ago, that is not bad progress. I believe that we should be content with that for the moment. But we can ask for a much clearer verification of the figures than the Government have so far given us. In the new clause we ask for a review and report on the effect of the earnings rule.
I should like to suggest what the Government might now do. First, they should ask a sample of pensioners who currently defer retirement whether they do so because of the earnings rule. That is the simplest way of ending speculation whether the end of the earnings rule means that nobody will defer retirement. In the CPC pamphlet it was assumed that the breakdown between those who would have deferred retirement and those

who would not would be about fifty-fifty. That can be verified only by a survey.
Secondly, the Government should consult organisations such as Age Concern and the Department of Employment about pensioners who are in work and ask them whether they would resume or continue in work or work longer hours if the rule were eased, as they have done in the past. I suggest that only a sample would be necessary.
Thirdly, the Government should find out more about the 85,000 working wives. They should find out whether the figure is accurate. Again, there should be a sample survey to find out how many are living with their husbands, whether they are in work or in receipt of other national insurance benefits which would prevent their husbands claiming a dependency allowance. That is what the new clause asks for.
In return for what I feel is a responsible and proper attitude by the Opposition in not opposing the Government's savings at this stage, the Government could at least undertake to review and report on the matters which I have described. This is a matter of intense interest to hundreds of thousands of people. I hope that I have succeeded in casting sufficient doubt upon the figures for the Government not to be able to claim that they are 100 per cent. right. Obviously they are not. The Government must now eliminate the guesswork and establish the facts so far as they can.

Mr. Cyril Smith: I rise to speak to Amendment No. 4, which is being taken in conjunction with New Clause 4, which was moved by the right hon. Member for Wanstead and Woodford (Mr. Jenkin).
I hope that the Government will accept the new clause because, as with most Tory amendments and new clauses, it does nothing other than add something that suggests that there must be a review. Amendment No. 4 is concerned with doing something practical and realistic rather than just calling for a report in time. Indeed, my experience is that those who want to do nothing usually call for a report. I understand that that is what the new clause is about.
It seems to me that we need to argue the principle of the earnings retirement rule. Academic arguments about which


figures are correct, why they are wrong, why they might not be wrong and why computers do not work, and so on, are interesting, but, as I said in Committee, they are arguments for academics. They do not particularly attract or interest me.
What interests me is what interests my constituents. They are interested in the fact that they pay for a pension and that, if they decide to continue working after pensionable age and if their earnings exceed a certain amount, the pension is reduced in consequence. It is the principle to which they object. They are concerned not whether the Government have got their figures right, whether the computers work, or any of this interesting academic argument, but whether their pensions are being reduced in consequence of their decision to continue to work.
6.45 p.m.
I accept that with regard to the principle the argument is basically whether we are talking about retirement or old-age pension. I take the view that we are talking about old-age pension. Those who support or pay lip service to wanting to abolish the earnings rule but do nothing about it, talk about a retirement pension. What matters is the way that it affects people's pockets—in other words, what they have to draw at the end of the week.
The object of the amendment is to establish the principle that the earnings rule should be abolished in time. I understand that all parties want to abolish it. However, we shall not abolish it as long as we keep making the excuse that the time is not opportune to begin to proceed in an orderly fashion towards its abolition which Amendment No. 4 would allow us to do. The Bill amends what was agreed in 1975, which would have led towards the ultimate abolition of the rule. The Bill now ensures that the rule will continue for many years— indeed, for ever. All that it does is to index-link the figure.

Mr. Orme: It goes up.

Mr. Smith: I said "All that it does." Of course it goes up, but, as the right hon. Gentleman knows, first, it does not bring it up to the figure that it would have been had we implemented the 1975 proposal and, secondly, it does not abolish

the earnings rule. It adjusts the figure to which the earnings rule applies in relation to current earnings, and so on. That is all that it does. It takes no step towards the principle of abolition, which is what the argument is about. Unless the Bill is amended, the earnings rule will not be abolished. The question is: should the earnings rule be abolished and should the Committee take the opportunity of moving in an orderly fashion towards its abolition?
In Committee I said—and it is worth repeating—that I took the view that there was nothing morally wrong—indeed, there is much to argue in favour of it—in a person entitled to pension continuing to work if he chooses to do so. In my view, to penalise him for continuing to work is quite wrong. In any case, it is arguable whether it is morally defensible that two people of the same age, having paid the same amounts into a pension fund, should not get an equal pension at the end. But the position is that one gets less than the other if he decides to continue working. That is wrong, and that is what the amendment seeks to put right over the years.
I understand the economic argument. However, I can only repeat what I have said before. In my experience of public life there is never an opportune time to do anything if one relies on the economic argument. One can always find economic reasons for doing nothing.
It is alleged that the amendment would increase public expenditure. I hope that the Minister will expand on that aspect. I read the memorandum of which he sent me a copy. The £12 million is based on the fact that the figure is left at £35 indexed. If that be correct, it is suggested that the saving will be £12 million less if the amendment is accepted.
What we are talking about is reducing the saving by £12 million, not increasing the amount by that sum as the law now stands. That is a different argument, and I hope that my interpretation of that fact will be either challenged or accepted, because it is important to the economic argument.
I tabled Amendment No. 4 in the form in which it appears on the Amendment Paper because in Committee the hon. Member for Islington, South and Finsbury (Mr. Cunningham) indicated that


this was a possible way of abolishing the earnings rule.

Mr. Orme: The hon. Gentleman pinched it.

Mr. Smith: Yes, I did. I have always taken the view, and it is as well to restate it, that I prefer to judge an issue on its merits rather than on the source from which it emanates. I am not concerned whether it comes from the Liberals, the Tories or the Labour Party. If what is suggested is right, I shall vote for it. On this occasion the hon. Member for Islington, South and Finsbury had a useful idea and I felt that it was worth raising the matter so that it could be debated on the Floor of the House.
Under my amendment, the earnings rule will be abolished in time. I accept that it does not affect certain invalidity pensions, but once the principle of abolishing the earnings rule is established any Government will have a problem in maintaining the rule in relation to one set of pensioners and not in relation to another. I believe that the amendment is worth pressing even though certain sections of pensioners will not be affected. It will at least establish the principle, and it is the principle with which I am concerned.
The 1975 amendment to the earnings rule, which raised the limit to £50, was based on figures that were evident then. If the House does not want to take a step back on what it did in 1975, the figure of £50 should be increased. Alternatively, the House should accept my amendment because what the House decided in 1975 was that it wanted the earnings rule abolished. What the Bill does is to say "We understand that that is what the House wanted in 1975, but we are not proposing to do it in 1977 because we cannot afford it. However, as a sop we shall include an index-linked provision which will be some compensation."
I do not accept that as compensation for the original proposal, because that proposal was concerned with abolishing the earnings rule. All that index-linking does is to ensure that no more than the present number of people are affected. It goes no way towards abolishing the earnings rule. Therefore, it would be proper for the amendment to be accepted, and I commend it to the House on that basis.

Mr. David Price: The hon. Member for Rochdale (Mr. Smith) knows that I have great sympathy with the case that he has made. However, where he and I differ is that whereas I agree that he is right to press the Government for their views on the proposal that emanated from the Government Benches— from the hon. Member for Islington, South and Finsbury (Mr. Cunningham), whose ideas on a method by which the earnings rule could be abolished I found attractive in Committee—I disagree with him when he says that economics do not matter. We are suffering from rip-roaring inflation, and I cannot regard the abolition as of the earnings rule as the No. 1 priority in the whole range of expenditure undertaken by the Department. If there is any money going, I would put forward other priorities, and I think that if the hon. Member for Rochdale and I were to have a heart-to-heart talk I could convince him that even in Rochdale there are matters that should take priority over the abolition of the earnings rule. For that reason, I cannot go along with the hon. Gentleman.
I think that it would help the House and our continuing debates—because this is an ongoing situation—if the Government would make clear—as I think they have hinted—that it is their long-term objective to abolish the earnings rule. The method proposed in Committee by the hon. Member for Islington, South and Finsbury and now in the amendment—of reducing the provisions yearly—is probably a more attractive way of doing it than raising limits.
I was persuaded by the hon. Member for Islington, South and Finsbury that that is the right way to approach the matter, and therefore it would be useful if the Under-Secretary of State, who is winding himself up to wind up the debate, would give us some assurance on the matter. It would be irresponsible to force a Division on the amendment. I say that with respect to the hon. Member for Rochdale, because if we are up for bids for extra money from the Department I have claims that I should put ahead of what is proposed in the amendment. I suspect that the Minister would agree with me on that, particularly when one bears in mind the matters that we shall discuss under Clause 11.
I would place maintaining the purchasing power of the mobility allowance ahead of abolishing the earnings rule as a priority. In the present state of our national affairs, all of us who press a certain issue on Ministers have to say where our priorities lie. It is all too easy for any of us to say we want more expenditure on desirable objectives. All of us who follow these social security matters are at one in our desire to improve the whole range of facilities provided by our social security system, but it is irresponsible for any of us to press claims of increased expenditure unless we are prepared to say where our priorities lie. Much though I agree with the hon. Member for Rochdale, what he proposes is not my top priority at the present moment.

Mr. Robert Boscawen: I found it strange to hear the hon. Member for Rochdale (Mr. Smith) chiding the other parties for not having a practical or realistic earnings rule. This is a Liberal amendment, but when the other parties did something practical in 1975 that started us on the slippery slope of phasing out the earnings rule, the Liberal Party was not represented on the Committee and did not make any fuss about it.

Mr. Cyril Smith: With respect to the hon. Gentleman, that is a stupid observation. The Liberal Party has nothing to do with who serves on a Committee. The membership is decided by the Committee of Selection. Some of us are stuck on Committees to consider Bills in which we have not the slightest interest. The other day I was stuck on a Committee dealing with a Bill about cemeteries and burials. It is wrong of the hon. Gentleman to criticise my party because it was not represented on the Committee. If a Liberal had been appointed to the Committee but was not present to take part in the debates, or to vote, I would accept criticism of his absence as being fair. I do not accept as fair criticism the fact that we were not on a Committee, because, as I say, that is not a matter for us. It is stupid to make that kind of criticism.

Mr. Boscawen: Everybody knows that if someone makes enough noise on Second Reading he will be stuck on the

Committee, irrespective of the party to which he belongs. If the Liberals had made enough noise about the 1975 proposals, they would have been represented on the Committee. I was on that Committee and had a part to play in the countdown towards ending the earnings rule.
Apart from the exigencies of the economic situation, there is an overwhelming case for getting rid of this earnings rule. It is a rule that I consider to be offensive, but it is difficult to get rid of it at the right time. That is why it was phased over a period. Circumstances have changed since 1975, and the particular circumstance that makes it even more difficult to make a change now is the high level of unemployment. There is bound to be more reluctance to make it possible for those who have reached retirement to continue in work and thus take up jobs that might be available to young persons. Circumstances will change again. Therefore, the Government must not get locked into this situation. They must be ever ready to change their views on abolishing the earnings rule and they should seek to do so at the earliest opportunity.
7.0 p.m.
The new clause makes the Government have another look at this, challenges their figures, and makes them look again at the cost of abolition. It is not altogether right to look directly at the cost of abolishing the earnings rule. The Government ought to look also at the cost of not abolishing it. Undoubtedly, if people are forced to give up work because of the earnings rule or if they think it is not worth while to continue in work, the cost of health care will be increased considerably in a number of cases. There is a psychological effect on people who suddenly cease to work or suddenly are no longer encouraged to work. That ought to be taken into account.
I am convinced that we shall never know how much the Government will lose by the abolition of this rule. Nevertheless, they should show us the figures again. I hope that when circumstances have changed—when unemployment has been reduced and we are on the road to recovery —we shall see an end to what is generally agreed to be an offensive rule.

Dr. Alan Glyn: Those of us who have been in Parliament for a number of years will appreciate that the earnings rule is a thorny problem which always raises emotions. Percentages are always high. We must examine the figures carefully. We have to look at this subject against the background of the 1975 Act and against the extraordinarily difficult economic background. I can remember the days when I used to have to write to people who pressed this point and say that the purpose of a pension was to compensate people for not working. This has now completely changed and people believe that, having paid for a pension, they should receive one. That is a good argument for the eventual abolition of the earnings rule. The questions are: When should it be abolished, and under what circumstances? The Government have put forward some proposals, as has my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin).
We must look carefully at the grounds, which my right hon. Friend outlined so clearly, for estimating the cost of abolition. I shall not praise or criticise the Government, but this is one of the most difficult calculations to make because there are so many factors involved. I do not normally give the Government credit for anything, but it is a difficult calculation. Nevertheless, every effort must be made to arrive at that calculation before the House can come to a sensible decision. What about the 5,000 wives, whether or not separated? What about the clawback in income tax? We must consider all of this before we abolish the rule.
I would be much happier if the Government had been able to state the exact cost, or, at least, to give an estimate. The House could then come to its own decision. This is an important matter. There are many people who want to go on working, who can give valuable service, but who are given no incentive to do so. There is often a disincentive. There is a disincentive of 135 per cent. for a married couple who both work. That is a problem. We are also faced with the problem of high unemployment. We have to balance both these factors of economy and unemployment. I believe it is right to say that most people do

not understand the rationale behind these proposals.
I cannot support the amendment of the hon. Member for Rochdale (Mr. Smith) because it does not cover all the groups of people whom I should like to see included. We also want to know what it will cost, and how many people will remain in their jobs. We need to look at the national background. In the long term the country wants to see the abolition of the earnings rule and people want to receive a pension for which they have paid as of right and not as an act of grace.
I hope that my right hon. Friend's new clause will be accepted by the Government. It will help the move towards the complete abolition of the earnings rule which I think most people want.

Mr. Tony Newton: I am tempted to support the amendment moved by the hon. Member for Rochdale (Mr. Smith). In many ways it seems to be a good compromise between the cost of £45 million claimed by the Minister—whether that figure is right or wrong, we can agree that previously the figure was quite substantial—and the Government's proposal. To reduce the figure, as the hon. Member for Rochdale wants to do, from £45 million, on the Government's figures, to £12 million, again on the Government's figures, would not have been an unreasonable compromise. I am doubtful about it because it excludes the worst affected category, namely, the husbands or wives of invalidity pensioners.
Even at £12 million I can see many other competing priorities, some of which would have to be put above raising the earnings rule further. It is right that we should concentrate our attention on the new clause. It has an advantage in that it ensure that, after what we are reluctantly accepting in the Bill, the House will not be able to forget about the matter and regard it as settled for ever. A report will have to be given to the House on the basis of a further Government survey of the situation and the possible disincentive effects of the earnings rule.
I do not want to spend a lot of time on statistics, which my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) has dealt with admirably,


except to say that it is possible to go on arguing about the Government's mistakes in the past, their possible mistakes in the present and their, no doubt, certain errors in the future almost ad infinitum. To draw any large conclusions based on the numbers of people working beyond retirement age, in a period when the level of unemployment has been at its highest for a generation, is bound to be a doubtful operation. It is almost impossible to disentange the effects of the changes in the earnings rule over the past two years from the effects of the fact that it is difficult to get work. We should not build too much of a statistical edifice on this uncertain foundation.
What I also find it impossible to believe is that there is not some significant disincentive effect in having the earnings rule at all. I recall that, after becoming a Member of Parliament in February 1974, the first occasion on which the earnings rule was drawn to my attention—admittedly it was at a time when the level was, I think, only £13, certainly much lower than now—was when two elderly ladies came to see me. These ladies were in the habit of doing some cleaning work at one of the local hospitals. The form in which they put the problem to me was not, as I recollect it, that the rule was unfair and that they had to pay a lot out of their earnings because of its working. It was that they were being forced to reduce their hours. They looked on the earnings rule as virtually setting the official limit to the amount of work they were allowed to do. When their pay went up and the earnings rule was not changed they cut down the amount of work they did so as to stay within the limits of the earnings rule.
I cannot prove how typical or widespread such action is. I suspect that with the growing sophistication that people have about the interaction of these rules with the social security system and the tax system, such a practice is quite widespread. People are more sophisticated about such matters than they were. They are aware of the effect on their take-home pay of various actions.
The fact is that the earnings rule is seen by many as setting an upper limit to the amount of work that they are prepared to do. It may be argued by

Labour Members that that is no bad thing at a time when unemployment is so high. It would be possible, I suppose, to say that we ought deliberately to be discouraging retired people from working to provide more employment for younger people. Even if that argument were to be accepted at a time when unemployment nationally is at almost 1½ million, let us be under no illusion that in the strategic situation in which the country now stands it is an absolutely idiotic argument.
There are two points here. The first is entirely general. To me, at least, the biggest single problem from which the country is suffering is the degree of disincentive at almost every level of society, in every class and every walk of life. People on high earnings, average earnings and low earnings all feel the same thing. More than anything else the country is suffering because people simply do not think that it is worth their while to do a bit of extra work, to take promotion, to put in extra effort or whatever. Ministers may choose to deny that, although Treasury Ministers have been increasingly reluctant to do so and now show signs of accepting that argument. The earnings rule is part of that argument. It is part of the society we have created in that we are doing more to discourage people from putting in extra effort. In our strategic situation that must be mad.
The other point is more specific. Before I came into the Chamber I was glancing at the relevant part of the consultative document on priorities issued by the Department of Health and Social Security in 1976. Paragraph 5.1 says:
There are now more than 6½ million people aged 65 or over in England and they comprise about 14 per cent. of the total population. Since 1961 the total population has grown by 7 per cent., but the over 65s have increased by over 25 per cent. This trend will continue until 1981. By 1980 nearly 15 per cent. of the population will be 65 or over. The number of over 75s, who are the heaviest users of health and personal social services, is expected to rise by half a million over ten years.
I looked also at a report in The Times of 14th December of the study by the Central Policy Review Staff on population and some of the strategic problems in social policy over the next few years. The report in The Times said:
The increase in the proportion of the population over retirement age beyond 1990s


is the report's most significant forecast in terms of spending implications.
These factors point to what we all know is one of the major problems the country will face over the next two or three decades, especially with the birth rate falling at the same time. I refer to the growing burden of the retired population on those who remain in work. In this situation, when we shall be worrying more and more about how to meet our obligations to the retired population, it must make sense to maximise the opportunities for those who would like to go on working and contributing to the output of the national economy.
In that context it seems that the proverbial man from Mars, descending to this planet and faced with a society in which we are worried about incentives to work across the board, in which we are worried about the growing burden—in this rather narrow sense—that our elderly population will present in the light of demographic trends, would think we were mad to have a rule in our system which appeared specifically designed to prevent those over 65 who wished to work from doing so.

Mr. Bruce Douglas-Mann: I have a great deal of sympathy with what the hon. Member is saying. Would he not agree that by setting the limit at £35 the Government have gone a long way to meeting his case? Would not the consequence of what he is putting forward be that a great many people, for example, Members of Parliament, would start drawing their retirement pensions while remaining in the House? Surely that is not the wisest expenditure of public money at the moment.

7.15 p.m.

Mr. Newton: This is why I began my speech by acknowledging the problem as it exists. I am ultimately prepared to accept that in the real world today, with our public expenditure problems, our taxation problems and our other priorities. we probably have to accept what the Government are putting forward. I am advancing the case for the report and the review as set out in the new clause because I believe it to be vitally important that we do not just leave the matter here.
We cannot do everything we want to do at this time. In our society, as it is expected to develop demographically over the next two or three decades, we should be seeking to give the maximum possible encouragement to every section of our population, including those over normal retirement age, to contribute to our economic output where they wish to do so, thus increasing our resources. I cannot quantify the exact extent to which the earnings rule at this level or any other has a disincentive effect. The overwhelming implication is that it has some disincentive effect and I do not believe that we can afford to allow that effect to remain. The sooner we get rid of it the better. The new clause is at least one step we can take to ensure that the problem is not forgotten and to be certain that we resume progress towards abolition of the earnings rule, which is what everybody would like to see.

The Under-Secretary of State for Health and Social Security (Mr. Eric Deakins): That last comment of the hon. Member for Braintree (Mr. Newton) gives me a rood lead-in, since it reinforces what has been a theme of this debate and, indeed, of our Committee proceedings when we considered the clause dealing with the earnings rule, namely, that all sides recognise that the earnings rule is undesirable for a whole variety of reasons.
The Government and, I suspect, the Opposition, and perhaps the Liberals, have made a commitment to phase out the rule as soon as resources permit. The Government's commitment was made clear by the Secretary of State in moving the Second Reading and has been reiterated by my right hon. Friend the Minister of State and myself in Committee. The Government do not need to carry out a formal review of the rule in 1978 to emphasise that abolition is and remains their long-term intention. I hope that the hon. Member for Eastleigh (Mr. Price), who asked for the commitment to be put on the record once more, will accept that. I do not want to quote from the statements made in Committee or during Second Reading. There are sufficient references for future historians to see that at least in the past couple of months all parties in the House have placed firmly on the record by one means


or another their commitment to abolishing the earnings rule.
The right hon. Member for Wanstead and Woodford (Mr. Jenkin) raised a number of queries on the figures and suggested that we should do some more work leading up to his suggestion in the new clause that there should be this proposed review. I suggest to him and his hon. Friends that this review would be little more than an additional piece of work placed on the Secretary of State and a rather hard-pressed Department. It would not, in itself, make funds available for the abolition of the earnings rule, nor would it bring forward the date on which abolition could be afforded. The right hon. Member raised a number of points about the number of people deferring retirement, the tax yield from additional earnings from those who stay on at work and the assumptions we have made concerning the wives of retirement and invalidity pensioners and so on. I fully accent that we have made estimates. When I say "we" I am speaking for the Government but also for those experts who advise all Governments in these matters.
Estimates have been made. They are much better estimates than have been given in the past two years in answer to various Questions. The reasons why they are much better estimates were given in the document that was circulated to members of the Committee and were discussed there. There is no doubt, therefore, that while we cannot be 100 per cent. certain that we have got the figures right—no one would attempt to say that we have got them perfectly right—we are sufficiently confident of the estimates and, what is more important, the Treasury is sufficiently confident of the estimates—since we are asked to make these public expenditure savings—to enable us to go forward believing that we have got them as near right as possible on the basis of the information available.
I am prepared to accept that the figures may be wrong. The important question is by how much they are wrong. But I am confident that they cannot and will not be as wrong as previous estimates have been in the past. I am sure that that will be accepted. Some hilarious examples were given in Committee. It was said that we were wrong in one

estimate by about 60,000. I do not think that that is likely to happen again. The reason why that estimate was wrong was given in Committee, and I do not want to bore hon. Members by giving it again. But it is in the nature of estimates that they can be wrong. The question is by how much.
The right hon. Gentleman as well as saying that our figures could be wrong, suggested that they could be wrong in only one way. He would not accept the possibility that the figures might be wrong in the other direction. With statistics one can be wrong in both directions. But I am prepared to accept from him that if they are wrong they are more likely to be wrong in the direction which he suggested than in the other.
The right hon. Gentleman asked the Government to do more work. Some work has been done— a survey of pensioners deferring retirement, consultation with pensioners' organisations, a survey of working wives and so on. I would not want to rule out any such activity, although it would not necessarily be for my Department. The Government Actuary might wish to do it, or at least be associated with it, since he was responsible for drawing up a number of the figures and assumptions on which we have proceeded.
While we can refine the figures and eliminate guesswork by having more and more surveys—I accept that it may be necessary to do some—we have to bear in mind the cost of conducting such surveys and administrative burden at a time when in the Government generally, and we in our own Department, are seeking substantially to reduce the number of civil servants.
Nevertheless, I have taken on board the right hon. Gentleman's suggestions. I shall consider his three suggestions and write to him in due course about them I do not want to suggest that my under. taking should in any way inhibit him from doing what he wants on the issue of the clause itself. I give him and the House an assurance that the Government will always seek to have available for the House as a whole accurate and up to-date costings for any future parliamentary debate. We do not necessarily need to have a debate, since we are concerned basically with what is the latest estimate of the cost of abolishing the


earnings rule at any one time. Now it is to be £35 dynamised, next year perhaps £40 dynamised, and so on.
The rule will obviously be kept under review. I give that assurance. There will also be the annual dynamisation—to use that horrid word—of the earnings rule under the clause as we passed it in Committee.
Instead of by a statutory review, the answers could easily be supplied in response to Questions if hon. Members wished to keep up to date on the figures. I and my colleagues will do our best to keep the Department on its toes in ensuring that the figures are up to date. If it was felt that the figures showed a very large difference from the figures given in Committee—if, for example, the figure of £60 million turned out to be £6 million—that would greatly strengthen the argument for going ahead with abolition of the earnings rule, since there would then be very little public expenditure involved. But I do not think that future figures are likely to be that much wrong.
The new clause deals not just with retirement pensioners but also with invalidity pensioners. I wish to make clear that there is no earnings rule for invalidity pensioners. I do not want to be accused of splitting hairs, making points on semantics, but I must put that on record. There is a therapeutic earnings limit, but this limit is not comparable to the earnings rule for retirement pensioners in character, purpose or effect. Invalidity benefit can be paid only to people who are incapable of work, and the vast majority of people who get invalidity benefit earn northing at all.
Special provision has been made for such people—largely in hospital or in local authority day centres—who might earn a little from doing something that is primarily therapeutic. Their "earnings" must not ordinarily be more than £9 per week. Even if the work is not actually done under medical supervision, it must be done with the doctor's approval. The figure of £9 is no more than a measure of the amount of therapeutic work which might be done without inevitably conflicting with the principle of incapacity for work which applies to all invalidity pensioners. Total abolition of any restriction related to earnings

would, of course, make nonsense of incapacity benefits, and there can be no question of reporting to Parliament on any such thing.
As I told the Committee, the Department is currently sponsoring a survey which will throw further light on the effects of the present therapeutic earnings limit on invalidity pensioners and on the availability and conditions of "employment" open to them. This is still at the pilot stage and it is not possible to say when the study will be completed, but future policy on cash benefits for sick and disabled people generally will take account of the findings of this survey.
I turn now to Amendment No. 4, presented on behalf of the Liberal Party by the hon. Member for Rochdale (Mr. Smith). The hon. Gentleman made the point that, in principle, the Liberal Party wants to see, if not immediate abolition, the phasing out of the rule rather along the lines suggested by my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) The hon. Gentleman's amendment, by progressively reducing the number of years over pension age at which the earnings rule would cease to apply, would abolish the rule entirely for retirement pensioners as from April 1981. It would be necessary also—I say this for the record—to make an appropriate amendment to Section 27 of the Social Security Act, which sets out the conditions which a person, on attaining pension age, must satisfy before he can be treated as retired in order to be entitled to retirement pension. I do not wish to develop that in detail but, if the amendment were to be passed, obviously something would have to be done, perhaps in the House of Lords.
Our objection to Amendment No. 4 is based solely on the cost involved and the timing proposed. As we have made clear, and as I have re-emphasised today, the Government are committed to the principle of abolition of the earnings rule when the economic situation allows. It is accepted moreover that phasing out, though not necessarily as proposed in the amendment, would be one of the methods which the Government would have to consider when abolition became an economic possibility. But the amendment would commit the Government to an immediate increase in expenditure, and figures were


circulated to the Committee on the basis of my letter to my hon. Friend the Member for Islington, South and Finsbury—rising from £12 million in 1977–78 to £118 million in 1981–82. However, it should be noted that the cumulative cost of £118 million misses out the figure of £32 million for the cost of abolishing the rule for dependent wives of invalidity and retirement pensioners, which would make a total of £150 million, the figure over which we argued in Committee.
Very little of that additional expenditure would go to existing pensioners, few of whom have earnings in excess of £35 per week. We estimate that there were 5,600 in July 1976.
7.30 p.m.
These benefits, this public expenditure, would instead go to people in regular employment who had become entitled to pension in addition to earnings. In present economic circumstances and in view of compelling priorities—I am very grateful that the right hon. Gentleman and other speakers recognise this—the Government cannot accept that kind of commitment to additional expenditure. Therefore, if Amendment No. 4 is pressed I shall have to ask the House to reject it.
Although we cannot accept New Clause 4, I hope that my undertakings will satisfy the right hon. Member for Wanstead and Woodford that the Government's intentions are honourable. We shall be doing more work and trying to refine the figures in a way which will enable us, when economic circumstances permit, to come forward with positive proposals, based on the latest available information about abolition of the earnings rule.

Mr. Cyril Smith: The Minister talks about a saving of £100 million and more. Will that saving be achieved if the law is altered as the Bill proposes, or if the existing law stands?

Mr. Deakins: The cost given in the appendix to the note circulated to hon. Members is the estimated cost in 1977–78 on top of an earnings limit of £35 increased in line with earnings as proposed in the Bill.

Mr. Patrick Jenkin: The Minister has replied fully and fairly to the debate, as

he always strove to do in Committee. I have made our position clear, that we want this rule ended, but I accept the view—in this I am grateful for the support of a number of my hon. Friends—that this is not the moment to do it. However, I hope that the Minister will do his best to see that his Department lives up to his undertakings. We shall continue to probe, through Questions and other means, to test whether the assumptions and cases in the paper that we were given in Committee are borne out in reality.
As the Minister said, if it turned out that the cost was £6 million and not £60 million, he would probably have the utmost difficulty in persuading the House to retain the rule for one month longer. But because it may be, if not £60 million, £45 million—even if it were only two-thirds or half that sum—he has made out his case.
We have to accept the £35 dynamised. However, as I said, since we started with £9½50, which rose to £13, then to £20, then to £35, and now to £35 dynamised, the House can be well pleased with progress. I think that millions of pensioners now feel that justice has been done. I hope that those who still feel penalised by the earnings rule will agree that the House will try to get rid of it as soon as possible.

Question put and negatived.

New Clause 3

CONTINUANCE OF WIDOW'S PENSION IN CASE OF ANNULLED MARRIAGE WHICH WAS VOIDABLE.

'Where a decree absolute of nullity is granted under section 16 of the Matrimonial Causes Act 1973, to a beneficiary of a widow's pension as described in section 26 of the Social Security Act 1975, prior to the date of her remarriage now annulled as above, notwithstanding subsection (3) of section 26 of the principal Act, she shall recommence her entitlement to that widow's pension on the day on which the decree is made absolute provided that this shall be after 31st July 1971'.—[Mrs. Chalker.]

Brought up, and read the First time.

Mrs. Lynda Chalker: I beg to move, That the clause be read a Second time.
The subject of this new clause differs from some of the other matters that we have been discussing, but since it concerns the widow's benefit covered by Acts of Parliament to which the Bill refers,


this is an appropriate time to bring it before the House for consideration. There are some sad and unfortunate circumstances behind our tabling of the new clause, the title of which is about right. It is by no means obvious what lies behind it, as I discovered, so perhaps I may go into some detail.
When a widow has received a widow's benefit for some years and decides to remarry, she obviously does so in good faith, hoping that her second, or third, marriage will last. She certainly does not go into it, one imagines, with any intention of quickly getting out of it in order to renegotiate benefits from the State. Therefore, what we are dealing with is a question of good faith. If something goes wrong in that marriage it may be subject to the normal procedure of the divorce courts, or to annulment procedures which are covered in the Matrimonial Causes Act 1973. It is to the annulment of marriage in that Act that the new clause refers.
There are two circumstances under which a marriage may be annulled. The question that links the annulment of marriage to this Bill is whether the right of a widow to continue her widow's benefit under the deceased husband's contribution is relinquished or not following the annulment of that marriage. We have here two quite separate and different circumstances, one of which has a happy end already and to the other of which I seek to give a happy end, on behalf of the Opposition, in the new clause.
The first circumstance of annulment is that in which a marriage is void ipsi jure. That can happen only if the marriage takes place in bigamous circumstances, within a prohibited degree of relationship—that is, between closely related persons—or if either party is under 16. We are not really concerned with this circumstance—obviously, in the case of a widow it would be only one of the first two cases, not that relating to either party being under 16, which would make it void ipsi jure—but if it were so voided, there would be no relinquishment of rights to continuing the widow's benefit after that annulment has been made final.
The second circumstance, however, is that in which a marriage has been annulled where it was voidable and the entitlement to benefit does not continue

after the decree has been made absolute. A marriage may be made voidable if either party did not validly consent. There may be some question what valid consent to a marriage is, but I think that the House will accept that if the matter concerns a widow who has been receiving widow's benefit for some time, she knows what she is talking about if she goes through with a second or subsequent marriage ceremony. Therefore, that situation is not one that I seek to correct.
The second consideration is where the marriage was not consummated, owing to the incapacity of either party. This is a difficult area, in which medical advice is often sought, and it is one of extreme pain and often sadness to the parties involved. The Matrimonial Causes Act 1973 took over the responsibilities of the Nullity of Marriage Act 1971 and provided that
A decree of nullity granted after 31st July 1971 in respect of a voidable marriage shall operate to annul the marriage only as respects any time after the decree has been made absolute".
The problem that we face is that once the right of the widow's benefit has been extinguished, as the law stands there is no re-entitlement to benefit even after that time when the decree has been made absolute.
Entitlement decisions in this sort of circumstance are made in the first place by an insurance officer. I do not wish, in anything I say, to be taken as criticising the insurance officers, members of the tribunal or the national insurance commissioners. They are merely acting within the law as it stands.
The first procedure after a marriage has been declare void and the decree of nullity has been made absolute is for the widow, now separated legally, once more to appeal to an insurance officer for the re-establishment of her benefit. Most of the decisions have been made on the basis of Decision R(G)1/73. In all the cases I have so far been able to discover the decision has been made not to give the widow re-entitlement to her widow's benefit. The reason that this has happened is that the Matrimonial Causes Act 1973 defines the different sorts of nullity but the National Insurance Act 1965 does not currently take account of what is contained in the 1973 Act.
Once there has been an appeal to the insurance officer, as in other cases an appeal can be made to the tribunal and after that to the Commissioners. The present position is that a non-consummated marriage is guided by case law. In a decision dated 10th October 1975 Commissioner Neligan stated:
The Commissioners held that the decree of nullity on avoidable ground was no longer retrospective and that a remarriage which had an existence for a period before that in respect of which the benefit is claimed is relevant to such claim since the proviso to Section 28(4) of the National Insurance Act 1965 prohibits payment 'for any period after the widow's remarriage' and not merely for any period during which she is remarried. Thus, the whole period from the date of remarriage was the peiod after the claimant's remarriage within the meaning of Section 28 with the result that a widow's pension was not and would not in future be payable to her.
We understand that the law that was made in the beginning was made perfectly fairly, namely, that there is no widow's benefit entitlement during the time when she is remarried even if she is parted from the man she has remarried and the marriage has not been consummated, as is the case that I am putting forward.
However, the difficulty is that Section 28(4) of the National Insurance Act 1965 continues the disentitlement beyond the date that the decree of nullity is made absolute. As we now have an up-to-date Act on our statute book, namely, the Matrimonial Causes Act 1973, it seems high time that we brought up to date the re-entitlement of a woman in this position. I am not the only person who says that that should be so. That position is not confined to my right hon. and hon. Friends. Indeed, in the same judgment Commissioner Neligan stated:
I regret having so to decide but it is the law as laid down by Parliament.
If that be the case, it is for the law laid down by Parliament to be changed, and that is what we are seeking to do with the clause.
In no way does the clause ask for a retrospective claim; it merely calls for re-entitlement from the day that the decree of nullity is made absolute. I believe that to be fair. In fact, my right hon. Friend the Leader of the Opposition has a constituent in exactly the position

that I have described. Although I have been able to find only a few cases, I believe that it is right to make the law fair, and that is what we are doing.
Very often the opinion among lawyers when a marriage breaks down is "One knows before a marriage whether it is likely to be consummated". I have heard that comment made in divorce proceedings, especially in local courts. It has come up on a number of occasions. But that is not true, especially when we are dealing with older women who may have different standards in their relationship with someone they intend to marry than younger people. There is no question that they would necessarily have prior knowledge of the possibility or the impossibility of consummating the marriage.
7.45 p.m.
We fully realise that if remarriage is for companionship only it is hardly likely that such a ground would be brought forward as a reason for finishing the marriage. The parties could abide by other Acts of Parliament put on the statute book in the 1970s. Such a ground as the consummation of marriage would not enter into a parting. It is clear that a decree of nullity is used only where it is right to do so because unavoidable breakdown grounds can cover almost any of the other situations.
We are dealing with a minute number of women, and such women would probably need other State support, so we are not likely to become involved in our perennial argument about money. In terms of public expenditure, we are talking about chicken feed. If that were not so, I am sure that my right hon. and hon. Friends would not be supporting the clause.
We are seeking to right a feeling of basic injustice. We realise that there may be a few vexatious causes, but they would be likely to come up under Section 16 of the Matrimonial Causes Act.
It may be that the Minister will turn to me, as he frequently does, to say that the Clause is not drafted quite as the parliamentary draftsmen feel it should be. There is an easy solution to that problem if that is his answer tonight, namely, to take the new clause away, draft it properly and do what I hope I have clearly outlined should be done, and either reintroduce it in another place or bring it back


here when the Bill returns from another place.
I sincerely hope that the clause, which seeks to give a widow re-entitlement to widow's benefit under her deceased husband's contributions where a decree of nullity is granted and where a marriage was voidable, will be acceptable to the House. We believe that it is important that this sort of fairness should be introduced into our legislation.

Mr. Boscawen: I rise briefly to support my hon. Friend the Member for Wallasey (Mrs. Chalker) in seeking to close a minor gap in the provision of re-entitlement to benefits. This is not a vastly important measure but it is one that occurs in an area of very human relationships. My hon. Friend has made it clear that this is a rare event. Happily decrees of nullity are not often given today. However, I feel that there is a small gap, which means a great deal to a small number of people, which should be filled. That will not be very costly and it is basic justice. I hope that the Government will be able to accept the clause, or at least to introduce another clause in another place that does the same thing.

Mr. Deakins: First, like the hon. Member for Wells (Mr. Boscawen), I congratulate the hon. Member for Wallasey (Mrs. Chalker) on the way in which she moved the clause. I congratulate her on the research that must have gone into it. The hon. Lady has certainly done a lot of devilling among law books.
I cannot accept the clause on behalf of the Government. I shall explain why that is so in a moment. I am conscious that we are dealing with a very delicate area of human relationships and I appreciate that there are not many people involved. There are one or two principles involved to which I shall turn in due course and they will explain why the clause as it stands is not acceptable.
As the hon. Lady rightly pointed out, under Section 26(3) of the Social Security Act 1975 a widow's pension is not payable for any period after her remarriage. A widow who remarries and whose second marriage ends in divorce cannot again become entitled to widow's pension on the insurance of her first husband.
In the case of annulled marriages, which is basically what we are concerned

about here, the position in England and Wales depends on whether the decree was obtained before or after 1st August 1971. Before that date a decree of nullity did not distinguish between a void and a voidable marriage. The decree merely stated that the marriage was by law void and that the petitioner "was and is" free from all bond of marriage with the respondent. The national insurance commissioners held that the retrospective effect of the decree entitled the widow to claim benefit on her deceased husband's record, although payment of benefit would be disallowed for the period from the date of marriage until the decree absolute.
In a report on nullity of marriage in 1970 the Law Commission came to the conclusion that the distinctions which existed
between valid, void and voidable marriages corresponded to factual differences in the situations of the parties which call for different relief from the Courts".
Those recommendations were given effect in the Nullity of Marriage Act 1971, which did not apply to Scotland.
Since that Act came into force there have been two types of nullity decree which distinguish between the void marriage, which is treated as if it had never existed, and the voidable marriage, which is annulled only from the date of the decree absolute. Section 5 of the Act, which is now Section 16 of the Matrimonial Causes Act 1973, provided that a decree of nullity granted after the commencement of the Act on the ground that the marriage is voidable
shall operate to annul the marriage only as respects any time after the decree has been made absolute, and the marriage shall, notwithstanding the decree, be treated as if it had existed up to that time.
From 1st August 1971 a decree of nullity of a voidable marriage contains words saying that a decree was on a certain date
made final and absolute
and that the petitioner
was from that date and is free from all bond of marriage with the respondent.
The retrospection provided by a decree before 1st August 1971 was thus removed.
Since 1st August 1971 the position of a widow whose second marriage is


annulled depends on whether her second marriage was regarded as void or void able. If it is declared to be void because it was bigamous, she is treated for national insurance purposes as if it had never existed, and widow's benefit can be reinstated. If, however, the marriage is annulled on the grounds that it was voidable, the widow's benefit cannot be reinstated.
A number of widows who had obtained decrees of nullity after 1st August 1971 were disallowed widow's benefit in a series of what were presumably test cases. A tribunal of commissioners heard three appeals in succession, two of their decisions being reported. The hon. Lady quoted one. The commissioners said that Section 28(4) of the National Insurance Act 1965, now Section 26(3) of the Social Security Act 1975, prohibited payment
for any period after the widow's remarriage
and not merely for any period during which she was remarried, and that the whole period from the date of the remarriage was a period after the remarriage.
A widow who remarries and whose second marriage ends in divorce, or, being voidable, in annulment, may be able to use her second husband's national insurance record to help her qualify for certain benefits, including retirement pension. But whether her marriage ended in divorce or this kind of annulment, that is, being voidable, she cannot again become entitled to widow's benefit as the legal widow of her first husband. There would be no justification for differentiating between divorcees and women whose voidable marriages had been annulled in order to allow the second group to be treated as widows despite the fact that they had entered upon a second valid marriage.
Where is the injustice then? The question is whether we are to draw the dividing line between void and voidable marriages on the one hand and divorces on the other, as the hon. Lady would like, or, as the Government believe, between a void marriage and divorce.
We cannot estimate in how many cases since 1st August 1971 a widow's remarriage has ended in a decree of annulment on the ground that it was voidable. The Department receives each year a few

representations from hon. Members on the subject. We have had 19 in the past two years, one concerning a constituent of the hon. Lady. Overall, it seems unlikely that more than a very small number of cases is involved. Therefore, cost is not a factor.
Nevertheless, acceptance of the clause would open up the whole question whether a widow's pension should be restored if her second marriage ends in divorce. Successive Governments have always held that divorcees who were formerly widows should be treated the same in all respects as divorced women generally. The law in England and Wales since 1971 has unquestionably been that annulments of this kind are to be treated like divorce in all respects.
In view of these implications, the Government cannot accept that the change in the law in 1971 can be disregarded for national insurance purposes. I have a great deal of sympathy for the case that the hon. Lady has put, but I hope that in view of my explanation she will feel able to withdraw the new clause.

Mrs. Chalker: I am very disappointed that the Government cannot accept the clause. However, I understand the distinctions between a void marriage and a voidable marriage as described by the Minister. As he said, the question is whether to draw the line of re-entitlement for widow's benefit between the void marriage, on the one hand, and the annulled marriage and divorce, on the other, or whether we put the void marriage and annulled marriage together, leaving the divorce outside the restoration of widow's benefit.
We would not seek to argue that other than in these very special circumstances, which are not really those of the divorcee, the divorcee should have her entitlement to widow's benefit restored. That would make nonsense of many of the other rules of our whole national insurance system. But it still seems to me that there are a number of greater similarities between the void marriage and the annulled marriage than between the annulled marriage and the divorce.
I realise that the Minister will not be persuaded to accept the clause tonight. But he has given us an interesting new fact, that there have been 19 applications to the Department in the past two years.


That is information that so far I had not been able to obtain for myself.
The House should not let this matter rest. I believe very firmly that there is an injustice here. Any marriage that ends because it has not been consummated is a most unfortunate and hurtful experience for a man or a woman, but particularly for a woman. It will probably be said that there are ways of avoiding this, but in a small number of circumstances the procedure of annulment of marriage on those grounds is followed.
We are entering the province not of the Department of Health and Social Security but of the law, where neither the Minister nor I feel competent to argue. I think that the best thing that the House can do is to allow me to withdraw the clause, but I shall try to take the matter up with our legal spokesmen. I hope that the distinctions drawn by the Law Commission back in 1970 will be reviewed, so that the plight of a very small number of women whose marriages have been annulled since 31st July 1971 can be re-examined. I hope that one day we shall have in our law justice for those women, who have had a most difficult time.
I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Clause 1

AMENDMENTS RELATING TO CONTRIBUTIONS

8.0 p.m.

Mr. Patrick Jenkin: I beg to move Amendment No. 1, in page 3, line 23 at end insert:
'(8) On or before 1st January 1978 the Secretary of State shall lay before Parliament a report estimating the number of employed earners whose employment will be contracted out employment within the meaning of section 30(1) of the Pensions Act at 6th April 1978 and setting out the level of primary and secondary contributions which, in the light of such estimate, will have to be specified in an order made under subsection 6 above'.
In one sense this amendment is consequential on the amendment that the Government moved in Committee to give effect to the original intention that they should have complete flexibility over the fixing of contribution rates when the new two-tier pension starts in April next

year. The purpose of the amendment is to oblige the Government to lay before Parliament what I may call an interim report on the progress of contracting out and on the consequences for the level of contributions.
The purpose of this debate is to give the House an opportunity to find out from the Government what is happening now about contracting out and to enable us to express some of the very real anxieties that are now being felt in the occupational pensions world about the developments that have taken place since the Social Security Pensions Act was put on the statute book. It is no secret that there are now very great uncertainties about the progress of contracting out and that the cause of this uncertainty is the impact of pay policy on pensions.
If there is not a relaxation of pay policy in order to allow an improvement in pension schemes beyond the minimum level necessary for contracting out the result can only be that the numbers of employees who will be contracted out from the State scheme will have to be scaled down drastically from what was assumed on all sides when the Social Security Pensions Bill was going through the House. If the numbers have to be dramatically scaled down the consequences will be far-reaching, because the arithmetic on which the Government Actuary based his calculations—as set out in the White Paper that accompanied the Bill—assumed that certain numbers would be contracted out.
Figures of 4 million or 8 million were given. It was made clear, as one might expect, that the more people who were contracted out the more the burden of paying existing pensions would fall on those who remained contracted in, with a consequence for contributions in the early years, and that, conversely, the more people who were left contracted in the higher the burden of pensions would be as the scheme matured. Therefore, the level of contracting out will have a material effect on the levels of contribution both at the start of the scheme and as it develops. It is for those reasons that we think it right that the House should have an opportunity to discuss progress.
In the amendment I have suggested the date of 1st January 1978, but I would be prepared to listen to arguments why it


should be an earlier date than that. A more immediate problem that faces the Government was put in stark terms by the Chairman of the Occupational Pensions Board, Lord Allen of Abbeydale, who, in December, spoke of the possibility of complete chaos if firms did not get a move on with the procedure for contracting out. The noble Lord's warning was referred to in a letter to The Times by Sir Donald Sargent, Chairman of The Society of Pension Consultants, on 22nd December. The other signatories to the letter included Mr. Max Lander, Chairman of The National Association of Pension Funds, Mr. Kenneth Allen, Chairman of the Life Offices Association, and Mr. Denis F. Gilley, Chairman of the Association of Consulting Actuaries. Sir Donald and his colleagues wrote:
Our primary purpose in writing this letter is to draw attention to a particular difficulty which we are sure is, to say the least, a major contributory cause of the delay which is rightly causing so much concern. This is that under the present pay policy any improvement of pension benefits above the absolute minimum required to match the state pension is not permitted, unless the cost is set against the pay limit.
They went on:
We strongly endorse the view expressed by a prominent trade union leader that, unless urgent Government action is taken to remove uncertainty, then many people will be caught in the time net and be forced to contract in without any option.
That is the warning that Sir Donald Sargent and other members of the joint working party gave. Two weeks later it was reinforced in another letter to The Times, written by Lord Byers, Chairman of the Company Pensions Information Centre. After referring to the unified approach that both sides of this House had achieved on the Social Security Pensions Bill, Lord Byers said:
this unified approach is being undermined by the determination of the Government to continue its policy of restricting the improvements of occupational pension benefits above the absolute minimum required to contract out, unless the cost is set against the pay limits, and its insistence that no new policy for pensions can be announced until the next stage of the pay policy is upon us in July of this year.
Companies find it virtually impossible to carry out meaningful consultations and negotiation when they do not know whether or not they will be able to implement the policy thus agreed. Above all, the time factor in

bringing the new Act into operation is now crucial. The date for this is April 1978 in theory but in practice decision will have to be made well before the end of 1977–this year.
He went on:
All that is required from the Government is an announcement now to the effect that any improvements in benefits agreed in the coming months will be able to be implemented from an agreed date onwards. This does not constitute a breach of the pay code but it would allow consultations and negotiations to proceed to a positive conclusion.
Lord Byers was adding his considerable authority to the plea that had been made earlier by Sir Donald Sargent and his colleagues.
In the light of that letter I tabled a Question to the Secretary of State on 12th January asking
how many inquiries have so far been received by the Occupational Pensions Board from companies wishing to contract out under the Pensions Act 1975.
I got an answer that I must say shocked me. Here we are, just a few months to when all the companies will have to go through the complicated procedure of contracting out, and this is all that the right hon. Gentleman could tell me:
The Occupational Pensions Board informs me that since 1st July 1976 its officials have received on this subject some 200 letters about particular occupational pensions schemes and 150 general inquiries from life offices and others acting as consultants to more than one scheme, from whom there have also been telephone calls at a current rate of about 100 a month. Many inquiries have also been answered in the course of other business."—[Official Report, 12th January 1977; Vol. 923, c. 520.]
I asked the right hon. Gentleman how many inquiries had been received from companies wishing to contract out. So far, all that we have got, if his answer is anything to go on, is a remarkably small number of letters and telephone calls merely making inquiries. So far there seems to be no sign at all of serious applications to contract out.
Earlier, I had written to the Chancellor of the Exchequer, because it seemed to me that the pay policy was more a matter for him than for the Secretary of State for Social Services. I hope that the Under-Secretary of State will not take refuge behind that, because this is a matter of the utmost concern to his Department. I asked the Chancellor in


December for an early announcement of the date. He replied on 13th January:
I am very much aware of the views held by pension scheme managers on this subject, and naturally regret the uncertainties caused for them by the lack of any announcement. However, it is essential for this matter to be seen in its proper pay policy context. It would be inappropriate to enter into any firm commitment about relaxation of the present restrictions in advance of the general negotiations for the third round of pay policy. As you know, these talks will be commencing before long, and as I said to the House on 15 December, the Government hope that the outlines of the next round of pay policy will be clear in time for the Budget.
We do not know when the Budget is to be, but rumour has it that it will not be until towards the end of March—the Press talks of 29th March. The Chancellor went on:
In the meantime, I have warned the main pensions organisations that no statement can be expected in the immediate future. As soon as there is anything which can be announced, you may be assured that the Government will not fail to report it to the House.
I am sure that that was very good of him.
I also tabled a Question to the Secretary of State for Social Services asking for a statement, because the question of contracting out is his responsibility. That Question was also referred to the Chancellor of the Exchequer, who replied on 17th January,
I have been asked to reply.
It is part of the current understanding between the Government and the TUC that improvements in occupational schemes, or the introduction of new schemes, must count against the pay limit unless they are restricted to the minimum level necessary to contract out of the new State scheme to be introduced from April 1978. I have received representations from pensions interests requesting that a date be named for the relaxation of this restriction. I have replied that this will be discussed with the TUC in the course of the negotiations for the third round of pay policy. These talks will be starting shortly and the Government will report to the House as soon as there is anything further to announce on this subject."—[Official Report, 17th January 1977; Vol. 924, c. 14.]
That appeared to be rather final—we were all going to have to wait, just as we did for our tax reduction last year, on the TUC. But even before that reply, events were moving. We had the settlement of the miners' claim for substantial improvements in their pension scheme. I then wrote to the Chancellor:
I understand that the only reason why the agreement (if approved by the Union) has to

run from next August is to avoid conflict with the current phase of pay policy. However, presumably both sides are assuming that improvements in pension schemes will conform with the next phase of pay policy. Indeed, you hinted as much yourself in your letter, yet how far can anyone know how far a pension scheme may be improved until the guidelines are available? How do you know that the Mineworkers' settlement is going to accord with those guidelines?
I had an interesting reply. I wonder how many members of the NUM were aware of the terms on which they were balloting on their pension scheme improvements. The Chancellor replied:
Thank you for your letter of 14th January about the agreement between the National Coal Board and National Union of Mineworkers on early retirement for underground mineworkers. I think you have misunderstood the terms of the agreement. The Coal Board have indicated to the NUM that they will operate the early retirement scheme from August this year pay policy permitting"—
I note that the Chancellor underlined the words "pay policy permitting"—
and Tony Benn made this clear in the House on 17th January when he answered a supplementary from Mr. Skeet.
The Chancellor repeated what he had said earlier about further relaxations being negotiated with the TUC.
8.15 p.m.
I shall not weary the House by discussing what the Secretary of State for Energy did or did not say on 17th January, but I doubt whether it was clear to anyone in the House or, let me hazard a guess, to many of the underground workers who are looking forward to pension scheme improvements that the whole thing depends on changes in the pay rules as far as they affect pension scheme improvements.
I asked the Secretary of State for Social Services
how many firms will need to contract-out of the State pension arrangements by the end of 1977, if the 8 million workers envisaged are to be contracted out.
Throughout the debates on the Social Security Pensions Bill, there was a general understanding, although, I accept, no firm commitment, that about 8 million workers ought to be contracted out. The Secretary of State replied, on 18th January:
It is not yet possible to estimate how many employers, or employees, are likely to be involved in the contracting-out arrangements".—[Official Report, 18th January 1977; Vol. 924. c. 174.]


Apart from the fact that that was no answer to my question, it is clear that the Government have not the slightest idea of how far and how successful they will be with the policy of partnership. But time is running out, and the Minister must realise it. Firms have to formulate their proposals; they have to consult their staffs—that is statutory; they have to make their decisions; then they have to approach the Occupational Pensions Board, which, in turn, ought to have time to examine the proposals put to it by firms before it issues a contracting-out certificate. All this has to be done in time to enable the necessary formalities subsequently to be completed in time for the new scheme to start in April 1978. That will not be possible unless firms can now start negotiating with their unions and their staffs.
What firm can possibly formulate proposals to put to its staff unless it has some idea how far those proposals will be allowed under the next phase of pay policy? That is the key to the matter. It is not just a question of the firms needing to know where they stand; the complicated procedures that have been laid down by the House and that were put into the Bill at the insistence of the Government simply cannot be carried through unless there is sufficient time to do it and unless the firms know before they start that there is a reasonable prospect of carrying them through to success. No one is going to go through the immensely time-consuming procedures for improving their workers' pensions scheme and getting the approval of the board if, at the end of the day, that scheme can offer nothing better than the State scheme. It simply will not be worthwhile.
I remind the Under-Secretary of State that the right hon. Member for Blackburn (Mrs. Castle), in her White Paper "Better Pensions"—Cmnd. 5713—spoke of
a partnership between the State and the good occupational schemes.
The House will remember that the concept of partnership coloured all the debates that took place on the Social Security Pensions Bill. It was on the basis of a partnership that my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) and, subsequently, my hon. Friend the Member for Sutton Coldfield (Mr.

Fowler) were able to say—and I have since repeated on many occasions—that the partnership scheme embodied in that Act can stand and will not suffer the fate of earlier schemes put on the statute book by Governments of either party. In order to further the partnership proposal, many important amendments were accepted during the passage of the Bill and in the regulations made subsequently. All were accepted by the Government in the interest of ensuring that good occupational pension schemes could co-exist with the State scheme.
I said earlier that it was envisaged at the time of the Bill that up to 8 million workers might be contracted out—one has always understood this to be perhaps half in the public and half in the private sector. That assumption was based on the Government Actuary's tables in the appendix to the White Paper "Better Pensions".
I have to tell the Government that unless there is a speedy announcement, perhaps along the lines suggested by Lord Byers in the letter that I read out, there is not a cat's hope in hell of getting anything like 8 million people contracted out of the State scheme. Instead, people in perfectly good occupational schemes will find themselves left automatically inside the State scheme. That means that not only in many cases will they be paying twice for the same benefits; there will be the Gilbertian result that automatic inclusion in the State scheme will of itself constitute a breach of the self-same pay policy that has prevented firms from contracting out.
There will be additional pension benefits that will take them above the minimum level necessary to contract out. The Government cannot go on waiting, but must tell the industry that in the next round improvements will be allowed in pension schemes. If there is to be any reality in the professions of partnership on which successive Ministers at the Department have laid such stress, there must be an early announcement.
The purpose of my proposals is to oblige the Government to make a report by 1st January next on the estimated numbers to be contracted out and the consequent level of contributions that will have to be paid by those who remain within the State scheme. The object is to know, in good time before the new


scheme starts, what is happening. If the Government, on 1st January, are to be able to produce a report that will gladden the hearts of those who have placed such faith in their professions of partnership, they must act now, otherwise they will cause nothing but gloom and despondency and will make a mockery of all the efforts made by the late Brian O'Malley to ensure a genuine partnership between public and State schemes and good occupational schemes. I cannot over-stress to the Government the importance of this matter, and I hope that they will take my warning seriously.

Mr. R. A. McCrindle: I wish strongly to support the words of my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin). I hope that the Minister will have taken account of the sense of urgency expressed by my right hon. Friend, an urgency which I can confirm from my experience of the occupational pensions world.
This short debate gives the Government the opportunity to turn their attention to the subject of contracting out and to report to the House on exactly what is happening. I put the matter in that form because there are a number of uncertainties. I hope that the Minister will set out the Government's thinking on this vital point and will tell us where the Government stand.
I wish to endorse what was said by my right hon. Friend about the effect of pay policy in the past year on the development of occupational pension schemes and therefore on the ultimate number of those who are likely to contract out. The Minister will be aware of the fact that pay policy restrictions have acted as a halter to the achievement of the number of people who wish to contract out, as envisaged by the late Brian O'Malley when the Social Security Bill was going through the House in 1975. I do not see why we should now be told that we must wait until the last dot and comma of the forthcoming stage 3 of pay policy is settled.
We have been regaled in the Press in the last few days by indications of how difficult the Government are finding it to introduce stage 3 at all. The uncertainty felt by many people engaged in pensions schemes as we approach stage 3 may well

lead to the encouragement of arrangements for contracting out.
I see no reason why, in advance of stage 3, pensions interests should not be given an opportunity to know what is in the Government's mind on pension provisions. I expect that I shall be told that whatever is to be allowed will depend on income tax reductions, on the one hand, and the wages bargain, on the other. However, I hope that the Minister will try to find a way to let pensions interests know a little in advance what is in the Government's mind in seeking to improve pension schemes.
The number of people likely to be contracted out, if we were to take a guess in the light of what we now know, would be substantially fewer than the 8 million figure to which Brian O'Malley referred during passage of the Social Security Bill 1975. Anything that falls substantially below that, and is allowed to fall below it without some act of visible concern on the part of the Government, is to some extent a violation of the promise of partnership made by Brian O'Malley, and accepted by the shadow Ministers of the day.
I hope that the Minister will take this as a serious point because we want to continue the partnership between the two sides of the House on the subject of a second pension provision. The Government have it in their power to take account of the points made on Amendment No. 1 partially to achieve that aim, or at least to restore the faith of those who in the past few months have doubted the Government's sincerity.
I am aware that the date of 1st April 1978 was suggested in the first place because it was not intended to rush matters. It was thought that a leisurely pace would be more suitable and that there would be wide-ranging consultations to give employers maximum opportunity before the required date arrived.
On occasions the Government have been bewitched by the fact that 1st April 1978 seemed to be so far distant that they did not feel they had to take action of the type I suggest. However, 1st April 1978 is now under 14 months away. If we are to consider a reasonable number of contracted-out persons, which I still believe to be Government policy, the Government must show, through the words of the Minister today,


that they understand the difficulties experienced by employers and occupational pensions' interests and seek to allay our fears.
It was suggested by Lord Byers that chaos would result if something along the lines of the amendment were not enacted shortly. I suggest that chaos is a strong word, but certainly there will be disillusionment and disarray unless some positive reaction is forthcoming from the Minister.

Mr. Patrick Jenkin: I would remind my hon. Friend that the word "chaos" was used not by Lord Byers but by Lord Allen, the Chairman of the Occupational Pensions Board. Lord Allen warned that unless a compromise came forward quickly, the Occupational Pensions Board would not be able to cope with the situation that would come later.

Mr. McCrindle: I stand corrected, but chaos is being predicted by responsible people in the occupational pensions' sphere, and it is something the Government cannot afford to ignore if they still intend to go forward with the partnership with State provision.
To concentrate on a particular date is sometimes a good thing for Governments of all political complexions. The amendment requires the Government to report to the House as to the state of play at a particular date. I would have thought that having that date in mind, and knowing that they will have to face the House then, the Government would bestir themselves rather more than they have so far. I hope for that reason, and for many other reasons, that the Under-Secretary will be able to accept the amendment.

8.30 p.m.

Mr. Deakins: I recognise the concern that has been expressed and I shall come to the principal subject of that concern in a moment, but first I want to deal with the principal object and vehicle of the debate and that is Amendment No. 1.
The effect of the proposed amendment is self-evident but its purpose, in spite of what has been said, is not so clear. It may be simply to provide information at that stage about the progress of contracting out or it might be thought that the amendment would give scope for dis-

cussion between the date that the report is made and the date that the order giving contribution levels for new pensions is laid. But the order, as required by Sections 120 and 121 of the Social Security Act 1975, will be subject to affirmative resolutions of both Houses and the draft order must be accompanied by a report of the Government Actuary giving his opinion on the likely effect of the order on the National Insurance Fund.
The amendment is superfluous and it does not meet the case that has been made for urgency. The report, as suggested in the amendment, would not need to be laid before Parliament before 1st January 1978. That is hardly in accordance with the urgency that has been expressed, because the normal expectation, based on previous experience of the time needed to make the necessary administrative arrangements after approval of the order, is that the order containing the proposed rates of contributions for the tax year 1978–79 would be laid before the House before the end of 1977, possibly in November but probably in December.
In formulating his report the Government Actuary will need to take account of a variety of factors that will have an influence on the contribution rates and these will necessarily include an assumption about the number of employed earners whose employment will be contracted out employment.
Here I come to the main burden of the remarks made by the right hon. Member for Wanstead and Woodford (Mr. Jenkin). He and the hon. Member for Brentwood and Ongar (Mr. McCrindle) said that the latest date for applications to contract out was a subject that was causing much concern and some misunderstanding. Perhaps it would be helpful if I set the record clear. In order to contract out from 6th April 1978 and to be entitled to a reduction in national insurance contributions, an employer must be in receipt of a contracting-out certificate issued by the Occupational Pensions Board. The employer must have first amended his pension scheme to meet contracting-out requirements and to have consulted his employees and relevant trade unions on this. Three months must be allowed for that consultation. If an application has not been made before April 1978 the


employer runs a risk that the Board may be unable to process his application in order to issue a certificate by 6th April 1978.
If an employer has an occupational pension scheme but does not intend to contract out he must issue a notice to this effect to his employees and relevant trade unions before the end of this year. This date has widely been misquoted as the final date for applying to the Occupational Pensions Board for a contracting out certificate. That is not correct. The OPB issued the main guidance required by employers and the scheme in March 1976. It has issued further up-to-date guidance in Memorandum No. 39, and other memoranda will be issued as necessary. An example of such a point was referred to by the hon. Member for Braintree (Mr. Newton) in Committee. It will be found in Hansard of Standing Committee A of the afternoon sitting of 27th January, column 493.
The OPB have been doing what they can to urge employers and schemes to make early decisions on contracting out. For instance, the Chairman of the OPB met the pension correspondents of The Times, The Economist and Financial Times on 1st December. Among the points he made was that time was running out: were employees aware that if their employer had not obtained a contracting-out certificate by 6th April 1978, they would have to pay full-rate national insurance contributions in addition to their occupational scheme contributions? The same message was given in a radio programme on pension schemes on 8th February and in a letter to The Accountant in December. The Chairman of the Board also wrote to Mr. Methven of the CBI asking the Confederation's co-operation in getting the message across to employers. I know that hon. Members will say that the Board may be doing its job to the best of its ability, but there is the problem of the pay policy.
In fact, there are two problems. The Bill creates a problem. Even if there were no difficulty about the pay policy, there would be problems in the timing of many firms considering whether to contract out because it will not be known before the Bill becomes law, by, I hope, 31st March, what alterations we shall make which might affect whether firms contract out.
I do not rest my case on the Bill alone, because once it becomes law, even though it may hold up a number of schemes in the meantime, it will then be out of the way. The pay policy is a much more important issue, and I take on board what has been said about current pay policy restrictions on the improvement in pensions schemes beyond the minimum contracting-out requirements contributing to employers' delays in consultations and preparation for elections to contract out. Ministers in my Department understand this point and we should have been failing in our duty if we had not brought these difficulties to the attention of other members of the Government.
We share the concern, and I shall see that its renewed expression in the debate is drawn to the attention of my right hon. Friends. I hope that the hon. Member for Brentwood and Ongar will forgive me if I have not shown the strength which he considers a junior Minister should have, but basically this is a matter for the Chancellor of the Exchequer. I know that he is fully conscious of this issue and is taking it into account in his review of policy and in the discussions that will take place about stage 3.
I cannot say any more in the present circumstances. I realise that this may be a little disappointing to the House, but I can assure hon. Members that my Department and the Government are well aware of the concern. We appreciate that it is in our interests as well. The sooner we can give the vital information on what is permissible under the pay policy for firms which are considering contracting out, the sooner they can finalise the arrangements.

Mr. McCrindle: I recognise the limitations on an Under-Secretary making pronouncements which are really matters for the Chancellor of the Exchequer, but will the hon. Gentleman pass on to the appropriate quarters my suggestion that if, in the formulation of stage 3, it is possible for us to be given the Government's intention on pension policy before the details on wages are finalised, we shall not have to wait until the last moment, when the tax and salary provisions are settled, before getting a pronouncement on pensions?

Mr. Deakins: I can assure the hon. Gentleman that the Chancellor of the


Exchequer is well aware of that point and that it has been put to him by Ministers. Of course my right hon. Friend has to take into account the millions of workers who are associated with the pay policy, and only about half the working population is in occupational pension schemes.
I do not want to go beyond what I said. I think that the right hon. Member for Wanstead and Woodford will be able to read between the lines of my speech. I realise this concern and share it. I recognise that it is not merely in the interests of people outside waiting to contract out, but also in the interests of the Government, because when the Government Actuary makes his assessment in the autumn on the numbers contracting out, he will have to try to get it as nearly right as possible because his assessment will affect the final level of contributions, income and outgoings involved in the National Insurance Fund. It is in the interests of both the Government and of the schemes that we sort this matter out as quickly as possible. In view of the report that we shall lay before Parliament, I hope that the right hon. Member for Wanstead and Woodford will regard his amendment as superfluous and withdraw it.

Mr. Patrick Jenkin: The Under-Secretary of State recognised that the amendment was more a vehicle to enable me to make a case for the need to achieve early clarification of the impact of the pay policy on pension schemes than it was designed to achieve on report. The debate has served a useful purpose and the Under-Secretary of State has been engagingly frank with the House. He conjured up a vision of his right hon. Friend the Secretary of State and others in the Department hammering daily on the door of No. 11 Downing Street in an endeavour to catch the attention of the Chancellor of the Exchequer and persuade him that he must do something. I hope that they are successful.
The issue has had a chequered history. When a pay policy was first introduced by the present Leader of the House it became clear within about three minutes that the right hon. Gentleman knew nothing—and I hope that I am not being unkind—and cared less about the impact of a pay

policy on pensions. Only by the most vigorous propaganda by Ministers in the Department of Social Services were we able to achieve the modest relaxation to allow firms to improve their schemes up to the minimum level to enable them to contract out. My hon. Friend the Member for Braintree (Mr. Newton) is right to say that the confidence of the pensions world in the Government's commitment to partnership has been severely shaken by the series of events of which the Bill is the last chapter. I hope that it is the last chapter and that we shall have clarity.

Mr. Orme: I take note of all that the right hon. Gentleman has said but there has been some indolence by some pension contractors. Many are not contracting in and many are not taking the decision to contract out.

Mr. Jenkin: I do not seek to defend all employers that do not act even when they can contract out. Firms will not go through the procedures of contracting out if all they can do is to produce a scheme which does not offer improved benefits over the State scheme. The whole purpose is that firms can offer added inducements and benefits to employees which the particular needs of the industry concerned require and which cannot be fitted into the rigid straitjacket of the State scheme. They will not do that unless they can improve on the minimum level. Many firms are hanging fire.
The one comfort that I can take is that the Under-Secretary of State recognised that fully and frankly and indicated that his Department was aware of the situation. He said that it was doing all it could within the Whitehall machine to try to get an early answer. I have succeeded as far as I could have hoped in initiating the debate and I know that Ministers will take the matter seriously. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2

INCREMENTS OF RETIREMENT PENSION FOR DEFERRED RETIREMENT ETC

8.45 p.m.

Mr. Deakins: I beg to move Amendment No. 2, in page 4, line 35, after


'substitution', insert 'of "seven" for "eight" and'.
This is a formal, technical amendment, consequential on a change made in Standing Committee A on 16th December 1976—referred to at columns 93–114 of the Official Report—when the Government suffered a minor defeat. In fact, I think that we had four minor defeats, one after another. However, the amendment merely puts something in order. I can give an explanation if the House wishes. Otherwise, I leave the matter at that.

Sir George Young: It would be churlish of me not to congratulate the Government on their wisdom in accepting the amendments wished on them in Committee on the subject of deferred increments. At that time there was support for this amendment from all sides in the Committee, which recognised the actuarial injustice meted out to those over 65 who continued to work. I am delighted that the Government have accepted these amendments, because this is the third time that I have tried to get the matter through the House. It is a question of third time lucky. However, in my enthusiasm in moving the amendments in Committee 1 forgot to table the consequential amendment that now appears on the Notice Paper as Government Amendment No. 2.
The Government have never denied the injustice to pensioners, but they have found a number of reasons for not doing something about it. In Committee they adduced a new reason, namely, that changing the rule would inconvenience the occupational pension schemes. I took the precaution of contacting a representative of the Legal and General Assurance Society on this subject to see whether this was so. Perhaps I may quote from the reply that I received from Mr. Robert Hardy, of Legal and General, who said,
I have consulted with various colleagues and can confirm that this change can be accommodated comfortably within general present practice and will not cause any administrative difficulties.
I hope, therefore, that that argument will not be put forward.
In Committee the Under-Secretary threatened hon. Members with "serious

political implications" if the amendment were carried. My hon. Friends and I look forward with eager anticipation to the collapse of the Government now that they have themselves accepted the amendment. I have cantered around this course many times. I do not propose to canter around it again. However, if the Government are to urge other institutions to give the public a square deal, it is important that they should do so themselves. In this case the Treasury and the Department of Health and Social Security have not given the public a square deal and have given those who have continued to work beyond the age of 65 a return of only 6½ per cent, on their money, whereas the Government have had to pay 13 per cent. or more to other sections of the community. This injustice is now recognised by the Government. They are putting it right, and I am delighted that they are doing so.

Mr. George Cunningham: I congratulate the hon. Member for Ealing, Acton (Sir G. Young) on his being responsible for initiating this change and I congratulate the Government on accepting it. I hope that the nature of the change, despite the fact that it is a relatively small one, will get some notice in the Press, because it is important that those who are drawing their pension should recognise that they will now be getting a 7½p per cent. a year increment for deferring the taking of the pension, as against the old 6½ per cent. It is a small increase, but it is the extent of the increase which appears to be justifiable on actuarial grounds.
There is nothing more important than that those who wish to go on working after retirement should not feel discouraged from doing so, and anything which gives them their own money in full is very much to be welcomed.

Amendment agreed to.

Clause 3

OTHER AMENDMENTS RELATING TO RETIREMENT PENSIONS

Mr. Newton: I beg to move Amendment No. 3, in page 6, line 4, at end insert—
'(5) The Social Security (Widow's Benefit and Retirement Pensions) Regulations 1974


shall be amended by adding the following proviso at the end of paragraph 7 ("Conditions for entitlement to a Category D retirement pension"):—
Provided that a person of British nationality born in Great Britain, notwithstanding his failure to qualify for a Category D retirement pension on attaining the age of 80 by reason of the residence qualification in (a) above, shall be entitled to such a pension at such later time as he shall have been resident in Great Britain for 10 years in the previous 20 years."'.
In adding my own words of congratulation to my hon. Friend the Member for Ealing, Acton (Sir G. Young), I have to acknowledge that the amendment to which we now come was the product of an occasion in Committee when we were not so lucky and tied eight votes to eight, with the result that the Chairman cast his vote against the amendment. We now find ourselves returning to it on the Floor of the House.
The amendment on which we tied in Committee concerned the over-80s pension introduced during the course of the Conservative Government of 1970–74.
The present position, as the Minister is well aware, is that it is impossible for a person to qualify for what we often talk about, as a piece of shorthand, as the over-80s pension unless he has in broad terms—I accept that there are small qualifications—been in this country for 10 years before attaining the age of 80. If he does not qualify at the age of 80—that is, if he was not already in this country before the age of 70—he will never qualify, because he cannot qualify later having been in the country for 10 years. If he has not fulfilled the qualification at the age of 80, that is it.
The purpose of the amendment is to modify the position for those defined in the amendment as being
of British nationality born in Great Britain".
The amendment would allow such people to receive the over-80s pension when they had been in this country for 10 years. In that sense the amendment modifies the rule for a category of people defined in a limited way.
We tied in Committee. I was not entirely convinced by the Minister's arguments on that occasion. The hon. Gentleman has written to us since and I have again looked at the arguments in Committee. I should like to comment on

what the hon. Gentleman said in Committee and on what he has written to us since.
First, I should like to refer to the case that led to my interest. I shall not go over it as fully as I did in Committee; I shall merely outline the case, which caused my concern.
A constituent of mine, Mrs. Bajwa, who was born in my constituency quite a long time ago, went to work in Tanganyika in 1921. Her husband died in Tanganyika in 1941. Mrs. Bajwa was unable to leave Tanganyika at that time because we were in the middle of the Second World War and it was not easy for civilians to leave Africa. Therefore, she obtained employment and continued to work in Tanganyika until the mid-1950s when, for various reasons, into which I shall not go, her thoughts began to turn to returning to this country. For various reasons connected with the difficulties of transition from colonial days to the present Tanzanian days, that proved a long and difficult process. It was not until 1964 that she was able to leave Tanzania, as it had become, and return to this country. By that time she was 72.
In 1972 Mrs. Bajwa became 80 years of age, applied for the over-80s pension, ran into the rule that I have described, and found that she could not get it. I emphasise that Mrs. Bajwa was born in this country, that her children were educated here, that she spent a long time serving our interests abroad, that she returned here in her retirement, and that she now finds herself denied the over-80s pension because of the 10-year rule.
Mrs. Bajwa thinks that she should receive the pension. I certainly think that she should, and I suspect that, regardless of the arguments that we may have about the legal technicalities, almost anybody familiar with the circumstances of the case would feel that, as a matter of common justice and humanity, she should have the pension.
I turn from that piece of background to the arguments put forward by Ministers in Committee. They fell under two interlinked heads. The first was what I call arguments about countervailing laws or legal commitments. Reference was made to the United Nations International Covenant on Economic, Social and Cultural Rights, which, it was said,


might preclude us from making an amendment of the kind that I had put forward.
I touch on that matter in passing, because the Minister did not put too much weight on it in Committee. I do not think that anyone else took seriously the notion that that covenant would prevent our making a change of the kind that I had proposed if we wished to do so.
Secondly, there was mention of the Race Relations Act. Indeed, the Minister for Social Security virtually accused me of being a racialist—which I do not think he meant, and which I reject—for having sought to confine the amendment to people of British birth and nationality.
That was not my purpose. My purpose was to limit the cost, and I can only say, on the argument about the Race Relations Act—an argument that was not fully developed in Committee and was not the subject of the Minister's letter—that I find it difficult to believe that that Act would prevent us from paying a social security benefit of this kind to persons born in this country. There might be a more genuine argument about the point of British nationality and British citizenship, and I can see that there might be complications there, but I doubt very much whether they would preclude us from doing anything along the lines that I have suggested.
As an aside, I may say that I, personally, would prefer to see the net cast a little wider than I have done in my amendment. I cast it as narrowly as this to keep costs to a minimum, but I accept that there might be a problem, if only because most of us would like to see our social security legislation applied as even-handedly as possible to all in this country without too many of these distinctions.
I am not convinced that it would be impossible to do this, and I am not convinced, either, that it would be offensive to the majority of people here if we were to confine the benefit that I am suggesting to those who were born here and to seek some way of confining it to those who have a strong and continuous connection with this country over the period of their lifetime. At any rate, the Minister might want to come back to that aspect.
I want to come to the third point that the Minister made, of countervailing legal obligations, which undoubtedly has much more force. This is the question of our obligations to the EEC. There were two aspects to what the Minister said. First, he suggested that our commitment under the Treaty of Rome might make any attempt to do what I have suggested wholly out of order—it would be overridden by the Treaty of Rome. As I understand it from the letter that the Minister addressed to my right hon. Friend—he kindly sent me a copy—his legal consultations have shown that that is not the case, that the Treaty would not automatically override an amendment of our domestic legislation along the lines that I have suggested.
What is clear from what the Minister said in Committee and in his letter to my right hon. Friend is that the treaty undoubtedly would modify what I have proposed here, to the extent that, in certain circumstances at least, this could not be confined to British nationals but would have to be extended to EEC nationals. It might be helpful, from the Minister's point of view and that of the House, if I read what I take to be the relevant part of the Minister's letter dated 12th February 1977.
The Minister wrote:
… if a nationality condition were to be imposed for some over-80 pensions, the effect of the Regulations would be to place other EEC nationals who were covered by these Regulations in the same position as British nationals in relation to that condition. Article 7"—
that is Article 7 of the Treaty—
would not however nullify the effect of the nationality condition in relation to persons who, even though EEC nationals, were not covered by the EEC social security Regulations and were therefore outside the application of the Treaty in this respect, nor, of course, in relation to persons who were nationals of other countries.
The same situation would also apply to nationals of a non-EEC country with which we have a bilateral social security reciprocal agreement containing a non-discrimination clause.
I confess that if those in the House now have digested that, on my reading of it, they are a good deal cleverer than I am, because it took me several readings to digest. I think that it ought to be on the record, and I hope that the Minister will agree with my interpretation, which is that our obligation under EEC


regulations would extend my amendment beyond British nationals to EEC nationals in some circumstances, but would not automatically extend it to everybody who is not a British national; that is to say, the effect of the amendment, even modified by EEC regulations, would none the less be more limited than an amendment that had no qualifications at all in it. My amendment has the effect of preventing it from being universal.
9.0 p.m.
In Committee the Minister also raised the question of the possible invalidity of the limitations of my amendment as it relates to those born in Great Britain. I shall not weary the House by repeating the comparable paragraph that the Minister wrote on this issue. I hope that he will agree with me when I say that the question whether or not EEC commitments override the qualification of being born in Britain is a good deal less clear. There is some uncertainty— neither the Minister nor his advisers are absolutely clear—about the effect of that commitment and how far it would be overridden.
To sum up this part of the Minister's objections to the qualifications contained in my amendment, it appears that there is a point, somewhere in the middle, at which we meet. My qualifications would not be entirely effective and not entirely limited to British nationals born in Great Britain. Equally, those limitations would apply to some extent and would prevent the amendment from being universal.
I emphasise that, because it leads me to the Minister's objections to the cost of the proposals. In Committee he said that there were two elements in the amendment. First of all, he recognised that there was a great deal of uncertainty, but said that at present there were about 1,000 people over 80 who would qualify for the over-80 pension, as a result of my amendment, but who already received supplementary benefit. Therefore, there would be no additional cost involved, because the cost of paying the pension would be offset by the reduced cost of supplementary benefit. We can write that out of the argument.
In that case we would simply be taking some people off supplementary benefit

and reducing the dependence of others upon it. That is an objective that I am sure all hon. Members would agree is desirable.
I turn now to the main arm of the Minister's argument about cost, in which he emphasised more strongly his uncertainty about what precisely was the situation. In Committee he said:
there might be a further 2,000 others who stand to gain in full when they have lived in this country for 10 years."—[Official Report, Standing Committee A, 21st December 1976; c. 141.]
There was uncertainty both about the numbers and the ages of these people and therefore one was virtually making a guess or arbitrary assumption when estimating the cost. The Minister concluded by saying that about half the 3,000 people involved—the 1,000 on supplementary benefit and the 2,000 others—might qualify straight away. He said that about 500 of them would be on supplementary benefit, and that the gross cost, therefore, would be £750,000, offset by the £250,000 supplementary benefit, giving a final figure of £500,000.
We are in a difficulty. The Minister acknowledges that his estimates are uncertain and virtually arbitrary. I cannot dispute them and say they are too high. But, on the basis that the Minister did not choose the lowest possible estimate, and on the basis that we have already agreed, that the limitations in my amendment would reduce the numbers somewhat—because those figures are based on the assumption that the limitation to people of British birth and nationality could not be applied—and given that my limitations have some effect, the figure is likely to be lower than the Minister suggested.
At that point, rather than quarrel further over the figures, I would say that it looks as if we are talking, at the most, of a figure somewhere between £250,000 and £500,000. That is the best "guesstimate" we can make. That is well within the margins of estimating error on almost any aspect of Government policy. It is well within the margins of error on the subjects that we were talking about earlier. It is a possible cost, but I do not believe that it is a cost of a size that could justify denying social justice to people such as my constituent and those who may be in the same category,


if we are convinced, as I am, that it is right to do something about such people.
In Committee the Under-Secretary and, even more so, the Minister of State, made a great deal in Committee of the so-called open-ended commitment which this proposal involved. I want to spend a moment or two examining precisely what this open-ended commitment is supposed to be. The phrase implies, and was intended to imply, some substantial, continuing risk to the public purse. Let us look at what the commitment may be and who may be enjoying the benefits of it.
We have to make three assumptions before we can assume that the commitment is of any size at all. First, we have to assume that a pension of £9·45 a week, the current level, is sufficient to attract a large number of people to come flocking into the country and I beg leave to doubt that. Secondly, we have to assume that, having been attracted here by the prospect of these riches, they live for 10 years when, by definition, they have come here after reaching the age of 70.
Thirdly, we have to assume that they would all be in the category in which they had incomes that would mean that they would not qualify for supplementary benefit anyway. What we have to assume before we take this open-ended commitment argument seriously is a substantial number of people with a measure of private income, a life expectancy above average, willing to incur the expense of moving to this country after the age of 70, and prepared to wait 10 years to get a pension of less than £10 a week at current prices.
It is absolutely ludicrous to suppose that Europe or any other part of the world is full of people waiting to come to this country under those circumstances. Whatever the Minister may argue about the current costs, which are almost too trivial to be taken into account when we are arguing about doing justice to a number of people, I do not think we can take seriously the implication of the open-ended commitment argument. It is little more than a phrase.
We have here an amendment that would cost a tiny amount but would be well within the margins of error of almost any significant Government pro-

gramme. In accepting it we would be doing justice not just to my constituent, about whom I am obviously concerned, but to other people—not a large number—in similar circumstances. We would be putting right something in our system which is unfair to people who were born in this country, who have a strong connection with this country, and to whom we have some obligation when they return here in their old age.

Mr. Deakins: There are two main objections to this amendment. First, there is the restriction of the easing of the residence test to people of British nationality born in Great Britain and, secondly, there is the cost. The hon. Member for Braintree (Mr. Newton) has spent some time going into detail on both counts. On the residence issue, which is important, we had some debate in Committee and there has been further correspondence since then. The hon. Member quoted a letter sent to his right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin).
The position is that the Treaty of Rome prohibits discrimination on the grounds of nationality within the field of application of the Treaty. If a nationality condition were to be imposed for category D pensions, as the amendment proposes, the effect of EEC social security regulations would be to place other EEC nationals covered by those regulations in the same position as British nationals in relation to that nationality provision.
The effect of the nationality provision would not, however, be nullified in relation to EEC nationals not covered by the EEC regulations nor in relation to people who were nationals of countries outside the EEC except where we have a bilateral social security reciprocal agreement with a country containing a nondiscrimination clause.
Although the Treaty of Rome and the EEC regulations do not specifically prohibit the amendment's other condition of being born in Great Britain the European Court might hold that it was not in the spirit of the treaty, and we would have to consider extending it to cover birth in other countries of the EEC. This condition might also be said to conflict with the non-discriminatory provisions of reciprocal agreements made with non-EEC countries. It goes a little wider


than the hon. Member for Braintree was seeking to suggest.
I do not wish to go into detail about the other two aspects which concern the Government, though not the Opposition. The United Nations International Covenant on Economic, Social and Cultural Rights, which the United Kingdom ratified on 20th May 1976, forbids discrimination in the recognition of the right of everyone to social security, including social insurance. In regard to race relations legislation, although Parliament can make or unmake any law, the amendment would certainly be inconsistent with and repugnant to the spirit of that legislation, and therefore very much open to criticism.
It seems particularly objectionable that the Opposition, who, when in office, fulfilled our country's moral obligation to the Ugandan Asians who were being expelled from their homes, should be moving an amendment which would ensure that the senior members of that community were the main group excluded from a general extension of benefit.
Generally speaking, the Government are opposed to nationality conditions in social security legislation and are trying to remove any such conditions. For example, the family allowance system, which has nationality conditions, is being replaced by child benefit, which has not.
On the question of cost, I do not want to go into all the arguments that were given in Committee. The hon. Member for Braintree has been quite fair. The assumptions on which our estimate of £500,000 a year was made could be quite wide of the mark, either up or down, and I would not like to say which way. But the hon. Gentleman's cavalier attitude as a Back Bencher made me almost envious of him—saying, in effect, what was £250,000 or £500,000 within the margin of error of major items of public expenditure? I cannot imagine what his right hon. Friend the Member for Wanstead and Woodford, who was a Treasury Minister, would say to that. But I can imagine what my right hon. and hon. Friends in the Treasury would say. They would not accept that as an excuse either now or at any time for remedying what may seem to be an injustice, merely on

the ground that the cost was within the margin of error in estimating.
Therefore, while the Government would not on the grounds of principle resist a relaxation of the residence conditions for category D pensions without the restrictions on nationality and place of birth, which they find objectionable, I do not think that such relaxation can possibly be justified in present circumstances.

Mr. Newton: I am grateful to the Minister for having addressed himself to this matter. I accept that this is a difficult problem. At best, I must acknowledge the complications he mentioned, especially in the EEC situation. As I have said, I would prefer to see this not governed by a nationality condition. I should prefer to see it spread more widely. I do not think I can rightly press the matter this evening, but I hope that the Minister will give further thought to it at the earliest possible opportunity.
It would be much more satisfactory if we were to pay the over-80s pension to those who have been here for more than 10 years, whether or not they are British born or of British nationality. As I said, I attempted to limit it to a narrow range of cases where I thought that the injustice was particularly clear, but I do not think it right to restrict payment of these pensions to those who have been here for 10 years when they reach the age of 80. I cannot see any logic in that at all. The notion, for example, that someone should be able to come here at the age of 69 and qualify for the pension when he reaches the age of 80 but that those who come here at the age of 71 or 72 should never be able to qualify seems to be anomalous and unfair, leaving all nationality considerations aside.
9.15 p.m.
If there is to be a pension of this kind, we should try to extend it to as many people as we can. If there has to be a residence qualification, so be it, but a qualification that means that some elderly people can never qualify is not satisfactory. We already have an open-ended commitment, which is much more important than the Minister talked about in Committee, because there are far more likely to be numbers of EEC nationals and others arrriving here before the age of 70 than after that age. They will


qualify for this pension in due course anyway.
I understand the Treasury pressure that leads Ministers to reject even what I regard as a minuscule cost, but I must also recognise Ministers' problems, even if only because of those pressures. Therefore, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4

ALTERATION OF EARNINGS RULE

Amendment proposed: No. 4, in page 6, line 19, at end insert:

'(3) In section 30 of the principal Act, there shall be inserted after subsection (1) the following subsection:—

"(1A) With effect from such day as may be prescribed in the week containing 6th April in a year mentioned in the first column below, subsection (1) above shall have effect with the substitution for the words '5 years' of the words specified in relation to that year in the second column below—


1977
…
…
…
'4 years'


1978
…
…
…
'3 years'


1979
…
…
…
'2 years'


1980
…
…
…
'1 year'


and with effect from such day as may be prescribed in the week containing 6th April in 1981, subsection (1) above shall cease to have effect."'.—[Mr. Cyril Smith.]

Question put, That the amendment be made:—

The House divided: Ayes 21, Noes 161.

Division No. 68.]
AYES
[9.16 p.m.


Bain, Mrs Margaret
Johnston, Russell (Inverness)
Wainwright, Richard (Colne V)


Bell, Ronald
MacCormick, Iain
Watt, Harrish


Bottomley, Peter
Newton, Tony
Wilson, Gordon (Dundee E)


Crawford, Douglas
Page, Rt Hon R. Graham (Crosby)
Winterton, Nicholas


Glyn, Dr Alan
Reid, George



Grimond, Rt Hon J.
Smith, Cyril (Rochdale)
TELLERS FOR THE AYES:


Henderson, Douglas
Stewart, Rt Hon Donald



Hooson, Emlyn
Thompson, George
Mr. A. J. Beith and


Howells, Geraint (Cardigan)

Mr. David Penbaligon.




NOES


Abse, Leo
Dormand, J. D.
Latham, Arthur (Paddington)


Anderson, Donald
Douglas-Mann, Bruce
Lestor, Miss Joan (Eton &amp; Slough)


Archer, Peter
Duffy. A. E. P.
Lewis, Ron (Carlisle)


Armstrong, Ernest
Dunn, James A.
Litterick, Tom


Ashton, Joe
Dunwoody, Mrs Gwyneth
Lomas, Kenneth


Atkinson, Norman
Eadie, Alex
Loyden, Eddie


Barnett, Guy (Greenwich)
Edge, Geoff
Lyon, Alexander (York)


Bates, Alf
Edwards, Robert (Wolv SE)
Lyons, Edward (Bradford W)


Bean, R. E.
Ellis, John (Brigg &amp; Scun)
McDonald, Dr Oonagh


Bennett, Andrew (Stockport N)
Ellis, Tom (Wrexham)
MacFarquhar, Roderick


Bidwell, Sydney
Engilsh, Michael
McGuire, Michael (Ince)


Boardman, H.
Ennals, David
Madden, Max


Booth, Rt Hon Albert
Evans, Fred (Caerphilly)
Magee, Bryan


Bray, Dr Jeremy
Faulds, Andrew
Mallalieu, J. P. W.


Brown, Hugh D. (Proven)
Fernyhough, Rt Hon E.
Marks, Kenneth


Brown, Robert C. (Newcastle W)
Fitch, Alan (Wigan)
Marshall, Dr Edmund (Goole)


Buchan, Norman
Foot, Rt Hon Michael
Marshall, Jim (Leicester S)


Buchanan, Richard
Fowler, Gerald (The Wrekin)
Maynard, Miss Joan


Butler, Mrs Joyce (Wood Green)
Fraser, John (Lambeth, N'w'd)
Meacher, Michael


Callaghan, Jim (Middleton &amp; P)
Garrett, John (Norwich S)
Mendelson, John


Canavan, Dennis
George, Bruce
Mikardo, Ian


Carmichael, Neil
Goutd, Bryan
Miller, Dr M. S. (E Kilbride)


Cartwright. John
Graham, Ted
Morris, Alfred (Wythenshawe)


Cocks, Rt Hon Michael
Grant, George (Morpeth)
Morris, Charles R. (Openshaw)


Cohen, Stanley
Grant, John (Islington C)
Murray, Rt Hon Ronald King


Coleman, Donald
Grocott, Bruce
Newens, Stanley


Colquhoun, Ms Maureen
Hamilton, James (Bothwell)
Oakes, Gordon


Conlan, Bernard
Hamilton, W. W. (Central Fife)
Ogden, Eric


Cook, Robin F. (Edin C)
Hardy, Peter
O'Halloran, Michael


Corbett, Robin
Harrison, Walter (Wakefield)
Orme, Rt Hon Stanley


Cowans, Harry
Hooley, Frank
Ovenden, John


Cox, Thomas (Tooting)
Hoyle, Doug (Nelson)
Park, George


Crowther, Stan (Rotherham)
Hughes, Mark (Durham)
Parker, John


Cryer, Bob
Hughes, Roy (Newport)
Pavitt, Laurie


Cunningham, G. (Islington S)
Hunter, Adam
Perry, Ernest


Davidson, Arthur
Jackson, Colin (Brighouse)
Price, William (Rugby)


Davies, Bryan (Enfield N)
Jackson, Miss Margaret (Lincoln)
Richardson, Miss Jo


Deakins, Eric
Jeger, Mrs Lena
Roberts, Albert (Normanton)


Dean, Joseph (Leeds West)
Johnson, James (Hull West)
Robinson, Geoffrey


de Freitas, Rt Hon Sir Geoffrey
Kerr, Russell
Roderick, Caerwyn


Dempsey, James
Kinnock, Neil
Rodgers, George (Chorley)


Doig, Peter
Lamond, James
Rose, Paul B.




Ryman, John
Stewart, Rt Hon M. (Fulham)
Whitlock, William


Sandelson, Neville
Stoddart, David
Willey, Rt Hon Frederick


Sedgemore, Brian
Taylor, Mrs Ann (Bolton W)
Williams, Rt Hon Alan (Swansea W)


Selby, Harry
Thomas, Mike (Newcastle E)
Wilson, Alexander (Hamilton)


Shaw, Arnold (Ilford South)
Thomas, Ron (Bristol NW)
Wilson, Rt Hon Sir Harold (Huyton)


Silkin, Rt Hon S. C. (Dulwich)
Urwin, T. W.
Wilson, William (Coventry SE)


Silverman, Julius
Varley, RI Hon Eric G.
Wise, Mrs Audrey


Skinner, Dennis
Wainwright, Edwin (Dearne V)
Woof, Robert


Small, William
Walker, Harold (Doncaster)
Wrigglesworth, Ian


Snape, Peter
Walker, Terry (Kingswood)



Spearing, Nigel
Ward, Michael
TELLERS FOR THE NOES:


Spriggs, Leslie
Walkinson, John
M. James Tinn and


Stallard, A. W.
Wellbeloved, James
Mr. Frank R. White.

Question accordingly negatived.

Clause 6

OTHER ADJUSTMENTS OF BENEFIT

Mr. David Price: I beg to move Amendment No. 5, in page 7, line 19, leave out from 'age' to 'and' in line 21.

Mr. Deputy Speaker: With this we may discuss the following amendments:

No. 6, in page 7, line 22, leave out 'or invalidity pension'.

No. 7, in page 7, line 30, leave out 'or invalidity pension'.

No. 8, in page 7, line 44, at end insert:
'provided that the minimum amount of an increase of that weekly rate shall be the same as that specified in Schedule 4, Part 1V, column (4), paragraph 9 of that Act as the increase of non-contributory invalidity pension'.

No. 9, in page 7, line 44, at end insert—
(3A) Section 15(4) of the principal Act shall be amended by adding the following proviso:—
'Provided that the minimum weekly rate at which the pension shall be payable shall be the same as that specified in Schedule 4, Part Ill, paragraph 2 as the rate of noncontributory invalidity pension.'.

No. 10, in page 7, line 44, at end insert—
(3B) Section 33(3) of the principal Act shall be amended by adding the following proviso:—
'Provided that for a person entitled to a Category A or Category B retirement pension who satisfies the requirements of section 36 for entitlement to non-contributory invalidity pension the minimum weekly rate at which the pension shall be payable shall be the same as that specified in Schedule 4, Part III, paragraph 2 as the rate of non-contributory invalidity pension.'.

Connoisseurs of the Bill will recognise that Clause 6 is the old Clause 7, upon which we spent a bit of time in Standing Committee, where we had very detailed discussions. The old Clause 7 was one of the most obscure clauses in what is in

places rather an obscure Bill. I suppose that that is in the nature of miscellaneous provisions.

I should like to deal with the new and somewhat uneasy relationship between non-contributory and contributory invalidity pensions. The clause is about people over pensionable age whose contribution record for a full basic component retirement pension is deficient.

I wish to make two major points. The first is about people continuing to draw invalidity pension in lieu of retirement pension but at the rate at which retirement pension would have been paid. This they do because of the tax advantage. It is common ground that there may be some people who, because of deficient contributions, receive in total benefit on contributory invalidity pension less than they would on non-contributory invalidity pension.

Mr. Deakins: Mr. Deakins indicated assent.

Mr. Price: The House will be relieved to know that as I spelt out the figures in Committee I shall not repeat them now. Where a person in this situation has underlying entitlement to non-contributory invalidity pension, he can switch to NCIP or—which is the same thing—have his benefit made up to the NCIP rate.
The point that I wish to make is that NCIP was fixed at 60 per cent. of CIP, that is, of the basic invalidity pension without regard to invalidity allowance. The person we are concerned with is over retirement age and may have been receiving invalidity allowance, at a maximum of £3·20 per week, for a considerable number of years and in addition be entitled to an additional component which he has earned. I am referring to the new scheme not yet in operation.
9.30 p.m.
At present, it appears to be the Government's intention that both these extras


will be taken into account—in other words, that an individual will not be allowed to retain them on top of the basic NCIP rate. That appears to most of us to be a little unfair. I am glad that the Minister for Social Security, in a letter to me, said that this will be considered before new regulations are made.
My second point is rather more general, and I therefore hope that it will be easier to follow. The amendments that were withdrawn in Committee—I admit that they would not have been wholly successful—attempted to ensure that anyone with entitlement to long-term invalidity benefit, whether contributory or non-contributory, should retain that entitlement at a minimum rate equal to NCIP without limit of age. That is the key point.
The Under-Secretary, in Committee, and the Minister, in his subsequent letter to me, claimed that I would have created more anomalies than I would have resolved because, so the argument went, principally the CIP beneficiary without underlying entitlement to NCIP is a very different animal, which is more akin to the retirement pensioner who falls sick after retiring.
The Minister said that if we had a few hundred million pounds the answer might lie in paying everyone, contributor and non-contributor alike, standard benefits with the contributor getting earnings-related benefit on top. I understand that has been DIG's position which echoes almost word for word the submission made by the National Fund for Research into Crippling Diseases to the Royal Commission on the Distribution of Incomes and Wealth. It is a view with which I would find it difficult to quarrel.
We may all be able to agree with this in the long term, but at present a few hundred million pounds are not available. We need not pursue that argument at the moment, although I take the view that ultimately this is probably the answer. I should like the Minister to consider building into the system a 60 per cent. minimum for people whose contributions are deficient because of ill health or disability, whether this has been continuous so as to give them entitlement to NCIP, or has been intermittent. In the latter group, clearly those with entitlement to CIP are easily identified. There

is a strong argument for extending to them this safety net immediately. Whether the cognate group that the Minister mentioned in his letter is as easy to pick out I would hesitate to say.
I do not think that the actual expenditure involved would be at all great. We should merely be setting ourselves along the right path, for in most instances what is not paid as of right at the low levels that we are considering would be made up by supplementary benefit.
I know that one of the Department's minor sorrows concerning NCIP has been the low take-up, because for so many it would not raise them above the supplementary benefit level. That is a point which the hon. Member for Feltham and Heston (Mr. Kerr) should take into account when he jeers from below the Gangway. It is a rather complex argument, and those of us who do not want to take up very much time wish to follow our notes rather carefully. It is a point that the hon. Gentleman might take in hand himself. His comments from a sedentary position might then have a little more relevance to the debate.
On these matters I am at one with the Supplementary Benefits Commission, and I quote Professor Donaldson's first annual report for the benefit of the hon. Member for Feltham and Heston:
The ideal to which we would like to see policies directed would be a world in which large social groups such as … the disabled … rarely have to rely on a last-resort means-tested labour-intensive service for their incomes.
I hope that the Under-Secretary of State will agree that the general tenor of my argument is right, and that he will be able to go further than the Minister's very constructive letter to me, which followed the rather complex points that I made on this clause, when it was Clause 7, in the Standing Committee, so that we can agree on the measures that can be introduced, possibly at another stage in the Bill, to make the clause more coherent and to deal with this rather complicated problem, which I realise that not every hon. Member present has followed in my argument, nor will follow in the Under-Secretary of State's argument.

Mr. Deakins: The hon. Member for Eastleigh (Mr. Price) has benefited from the exchange of correspondence since the


Committee stage, when we had some very involved arguments about this matter. But there are a couple of points that I want to put to him, because he was, I think, straining at the leash a little in seeking to get me to go beyond my right hon. Friend on this matter. My right hon. Friend and I try to work in harness, and I hope that we shall continue to do so.
One thing that we cannot deny is that there are some odd-looking comparisons between the respective benefit entitlements under the contributory and noncontributory schemes. Certain groups, such as NCIP recipients, over-80 pensioners, and the invalidity pensioners under pension age, have a guaranteed minimum rate, whereas others—the contributory retirement pensioners and the invalidity pensioner over pension age, who gets invalidity pension at his retirement pension rate, do not.
In proposing that contributory invalidity pensioners over pension age, whether entitled to NCIP or not, should be guaranteed benefit at the NCIP rate, not just during their incapacity but for the rest of their retirement, the hon. Gentleman has raised an issue that goes far wider than just invalidity pensioners and that would create far greater disparities in entitlements than those that the amendment seeks to redress.
The pensioner over pension age who already has NCIP is someone who was incapable of work for substantial periods before pension age. We accept that the invalidity pensioner over pension age, on the other hand, with no title to NCIP, and whom the amendment is designed to help, is typically the person without a long history of incapacity before pension age. Such a person is virtually indistinguishable either from the over-pension-age sickness beneficiary, or—and this is the important point—from the very many elderly people who, while perhaps not sick or disabled at pension age, become chronically so soon after retiring.
We cannot accept that it would be right to guarantee a minimum benefit rate for life to a group who, possibly more by accident than anything else, were drawing one benefit rather than another immediately after pension age without extending the same kind of benefit floor to all

those over pension age. That would be a very expensive proposition indeed.
There are a number of other anomalies. The hon. Gentleman did not talk about dependency increases but the amendments would be anomalous because the elderly invalidity pensioner with only additional component would get his increase, whereas the retirement pensioner or the elderly sickness beneficiary would not. Furthermore, when the invalidity pensioner retired or was deemed retired and received exactly the same amount of personal benefit, his entitlement to an increase would cease.
There are a number of anomalies. We have not talked much about cost, but we examined the matter in Committee. The cost of this intended amendment at present rates is about £500,000 a year. That is a relatively modest cost, but it needs to be critically examined. I do not think that the anomaly that the hon. Gentleman has explained would in practice present many difficulties.
The second part of the hon. Gentleman's proposals aims to ensure that people obtain the maximum advantage out of existing entitlements, and that is an important matter. However, it is a matter for regulations as to how far somebody can add together the various benefit entitlements. I wish to stress that under the present rules an invalidity pensioner over pension age who has NCIP can draw the balance of his NCIP with his contributory title subject to not exceeding the total rate of NCIP. Any constituent parts, such as the invalidity allowance, are taken into account in assessing whether a balance of NCIP is due.
I must tell the hon. Gentleman that there can be no question of making the kind of change he seeks in the last year or two of the present scheme. Under the new scheme, if the present rules continued, additional components would not be paid on top of NCIP. The point I wish to stress is that no decisions have been taken about the interaction of benefit entitlement under the new scheme. The question of such interaction of benefits, however, goes far wider than just NCIP. It would therefore not be right or sensible to make piecemeal decisions in this area. Obviously we shall consider the matter, and also we shall have to take account of the costs of various alternatives in dealing with this Equally, we


shall have to consider the relative position of contributory benefit and fall-back noncontributory benefit which can create anomalies.
We shall bear in mind the hon. Gentleman's arguments. I know that he is arguing for a 60 per cent. minimum entitlement. We shall examine the possibilities of the second part of his proposal, but I can make no promises. I hope that he will take what we have said in good heart, and will bear in mind that what we are seeking to do is to achieve a more socially just social security scheme and certainly a less complex scheme, which will be easier for people to understand.

Mr. David Price: I thank the Minister for that reply. I did not expect him to accept my amendment, but the exchanges of view have been useful. The important thing now is to look forward to the regulations that will be issued by the Department under the new system. I hope that the Minister will be able to take account of some of the anomalies which we have discussed.
In view of the assurances which have been given to the House, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11

MOBILITY ALLOWANCES FOR CERTAIN PERSONS ELIGIBLE FOR INVALID CARRIAGES

Mrs. Chalker: I beg to move Amendment No. 14, in page 11, line 42, at end insert—
'(4) Notwithstanding the provisions of subsection (3) above the Secretary of State shall retain powers to issue, in exceptional circumstances, a certificate under this section to any disabled person he considers would have been covered by subsection (3) but for some delay, or error, or other circumstance, which he considers appropriate to take into account in any particular case and which is brought to his attention within one year from the date of implementation of this section'.
Habitués of social security debates will recognise the reason behind this amendment. In Committee we examined the problems that might arise when certain of the benefits through mobility allowance might not come to people whose circumstances had changed since a previous assessment.
In Committee the Minister put our minds at rest in a number of ways by saying that people who had a right to a vehicle in the past would undoubtedly be looked after by the benefaction of the Department in future, even if in the interim there were some administrative slip up. However, I recall that our discussion swayed in seeking to appreciate what both sides of the Committee were trying to achieve—namely, that no disabled person should be denied through some administrative error access to a mobility benefit or a vehicle.
9.45 p.m.
Both sides of the Committee were on the same wavelength because the Minister said in Committee:
I think the Committee will agree that it would not be right to treat as having reserved rights anyone whose benefit was withhdrawn before 1st January 1976 and who does not subsequently fulfil all the conditions of the old scheme that are relevant to his or her former category of eligibility."—[Official Report, Standing Committee A, 20th January 1977; c. 334.]
For those who are not as familiar with the change from being a beneficiary of an invalidity vehicle to being a beneficiary of the mobility allowance, that date may not have the same ring of change about it as it has to the disabled and to those who work so hard on their behalf. Cases have arisen since 1st January 1976 in which some people have not continued with their vehicles and because they were outside the group that could then apply for mobility allowance, they have also become disfranchised from that benefit. Therefore, some people may not benefit from any of the intended help with mobility, even though they are severely disabled.
We have considered the matter carefully and Amendment No. 14 is intended to clarify what will happen. I am delighted to see that the Under-Secretary of State for Social Services, who is the Minister responsible for the disabled, is here and I hope that he will reply favourably to this small amendment.
One of the problems that we often find during debates in Committee—which is where much of the detailed argument takes place—is that people outside the House do not understand or have access to all the detailed argument. It is well known in the House that there is still


much disquiet about mobility allowances and invalidity vehicles. I hope that the amendment will clarify what will happen if there is a delay, error or other circumstance that might prevent, for a time, the intended beneficiary of a mobility allowance from receiving the benefit. Provided the case is brought to the attention of the Secretary of State within one year from the date of implemention of the amendment—if it is accepted—it would be right to look after that person as if the delay or error had never occurred.
I have mentioned in the House on many occasions that we are indebted to Peter Large and the Joint Committee on Mobility for the Disabled for having worked out this official stop-gap that would ensure that nobody would fall between the provisions of our legislation when he should rightfully be entitled to the mobility allowance. We drew the case of a category three beneficiary with a trike or private car allowance to the attention of the Minister in Committee. This is the case of someone who is disabled, but not very severely, who has had a trike or private car allowance withdrawn before 1st January 1976, whose condition has deteriorated since that date to category one or two—very severely disabled—and who has not had the benefit of a medical reassessment.
We are well aware that such a person should have been offered the chance of a reassessment, but hen. Members who have disabled persons in their constituencies know that sometimes it has been impossible for the local offices of the Artificial Limb and Appliance Centre to carry out all these reassessments in the time available.
The problem has arisen because we have changed the system since 1st January 1976. We know that some of these centres have made mistakes in the past and they have tried to rectify them, but it is no good trying to rectify something that lies outside the law—as this case would be without our amendment.
If the person whose condition had worsened considerably were insufficiently disabled to qualify for a mobility allowance—and this is not impossible—if he were in an age group which had not yet been phased into the allowance or if he had gone beyond pensionable age, he

might miss out on the allowance for the rest of his life and do so, often, because of mistakes, administrative errors or delays for which he was not responsible. The amendment seeks to ensure that persons who might fall into that category are fully covered and that they will get the benefit when they would otherwise have been disenfranchised.
In a letter to my hon. Friend the Member for Eastleigh (Mr. Price), Mr. Peter Large has posed a number of questions in his worry that we might not get the amendment accepted. Hints given during the debate have led me to believe that I might be wasting the time of the House if I went through these points individually. Therefore I shall await the Minister's reply and if the points in the letter are not fully answered, I hope that it will be possible to ask for further clarification to help the House, our legislation writers and, above all, the disabled whom we are seeking to help by the amendment.

The Under-Secretary of State for Health and Social Security (Mr. Alfred Morris): The purpose of the amendment is to allow an extension of time during which exceptional cases may be able to establish reserved rights under Section 33 of the Health Service and Public Health Act 1968. It is not clear which exceptional cases hon. Members have in mind. They were asked in Committee to advise us of any deserving cases who might not be adequately covered by the wording of the clause.
Since then, the hon. Member for Eastleigh (Mr. Price) has kindly been in touch with a number of cases. I am grateful to him and to Mr. Peter Large, the Chairman of the Joint Committee on Mobility for the Disabled, to whom the hon. Member for Wallasey (Mrs. Chalker) has rightly paid tribute, for the detailed information which they have given us. I can reassure the hon. Member for Eastleigh on many of the points raised in his letters to me.
We believe that the principle of the amendment could serve a useful purpose if cases were to arise later which have not been foreseen. However, the amendment appears to have some drafting deficiencies and if it is withdrawn, a Government amendment will be put down in another place to achieve its effect. We


conceive the purpose of the amendment to be not merely to clarify but to improve the clause. I hope that in the light of my assurances, the amendment will be withdrawn.

Mr. David Price: I am grateful to the Minister for his response to the amendment and particularly grateful for his positive response to the correspondence which I have had with him and to the problems which I have put to his Department.
At this late hour, it would be wrong for me to say any more. I hope that in the light of what the Minister has said, my hon. Friend the Member for Wallasey (Mrs. Chalker) will withdraw the amendment.

Mrs. Chalker: I am grateful to the Minister for his comments. I thought that he might say that the amendment was technically deficient but we are delighted that he is to introduce an amendment in the House of Lords with the same intention, so that there will be no exceptions for people who, through administrative failure or some other delay, fall between having a vehicle or private car allowance and having a mobility allowance. In view of that assurance and in grateful recognition of the work done by my hon. Friend the Member for Eastleigh (Mr. Price) and Peter Large, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 12

AMENDMENTS OF SUPPLEMENTARY BENEFITS ACT 1976

Mr. Orme: I beg to move Amendment No. 15, in page 12, line 1, at beginning insert:
'() The Secretary of State may by regulations make such modifications of the Supplementary Benefits Act 1976 as he considers are appropriate with a view to securing that, for the purposes of that Act or of such provisions of it as are prescribed—

(a) the resources of a person under pensionable age who is attending a course of full-time education are treated as including any prescribed contribution notwithstanding that the contribution is not actually made; and
(b) any such contribution and any grant or ward made to such a person by a Minister of the Crown or a prescribed authority in connection with the course is not disregarded;

but nothing in this subsection or in any regulations made in pursuance of this sub-section shall be construed as prejudicing any power conferred on the Supplementary Benefits Commission otherwise than by virtue of this subsection.
() Regulations may specify the courses which are courses of full-time education for the purposes of the preceding subsection and the circumstances in which a person is or is not to be treated for those purposes as attending such a course'.

Mr. Deputy Speaker: With this amendment we may discuss Government Amendment No. 16, and No. 18, in page 12, line 9, at end insert:
'(2) Nothing in the above subsections or in any regulations made in pursuance of those subsections shall prejudice the position of handicapped students and, notwithstanding the above subsections. regulations shall authorise the payment of benefit in circumstances in which physical sensory or mental disability would be likely to preclude the obtaining of temporary employment during any vacation.'

Mr. Orme: This amendment seeks to reintroduce into the Social Security (Miscellaneous Provision) Bill a clause dealing with students' entitlement to supplementary benefit which the Government introduced on amendment in Standing Committee, where it was lost by the Chairman's casting vote. In reintroducing the clause I should emphasise that it is a completely different provision from that which was debated by this House on 2nd December last. I should

also make it clear that the clause deals only with supplementary benefit for students. As my right hon. Friend and I explained during the Second Reading of the Bill, we are proposing to deal with the question of unemployment benefit for students during the short vacations by means of regulations which will be submitted to the National Insurance Advisory Committee.
I remind the House that the original clause proposed that students should lose their eligibility for supplementary benefit during the two short vacations and that a special scheme should be introduced to help those for whom the denial of supplementary benefit would be likely to cause serious hardship. On Second Reading there was a general feeling that, in the present difficult economic circumstances, students should not be disadvantaged by getting in some cases less than their supplementary benefit requirements and that there would be no point in virtually duplicating the Supplementary Benefit Scheme with a new Hardship Scheme in order to achieve that result. I therefore agreed to reconsider the clause, in consultation with my colleagues. This matter was raised by my hon. Friend the Member for Coventry, South-West (Mrs. Wise) during Second Reading. I looked at the principle and discussed it with my colleagues, and it was accepted that we should drop that clause. I moved an amendment to that effect in Standing Committee.
The original Clause 13(1) has accordingly been dropped. However, it is important that I should re-affirm at this point that the Government agree in principle with the views expressed by the Supplementary Benefits Commission in its recent annual report—namely, that supplementary benefit is not an appropriate form of income support for students. But to change the student support system so as to make recourse to supplementary benefit unnecessary in every case would not be possible without unacceptable implications for public expenditure. In these circumstances—and the Commission fully agrees with this—the principle cannot be realised.
The purpose of the amendment is to provide statutory backing for the Commission's long standing practice of taking account of the parental contribution and allowing no disregard on the student


award. The Commission takes full account of the parental contribution because provision has already been made under the education legislation for a student support scheme which places responsibility on parents to contribute towards the cost of their children's maintenance while they are in higher education in so far as they have been assessed as able to do so. If the Supplementary Benefits Commission made good any shortfall in the parental contribution it would be acting in contradiction of the student grant scheme and taking on a liability which Parliament has placed elsewhere. This would undermine the whole concept of parental responsibility as reflected in the education legislation.
This is not the place to argue the question of the general student grant and general student support. What has happened is that much of the pressure has come on the Supplementary Benefits Commission because of the problems that many students face. This cannot be resolved by the Supplementary Benefits Commission, which is an independent body under Professor Donnison and which looks sympathetically at these matters. It feels that this matter cannot be resolved by the Supplementary Benefits Commission in the long term, but in the short term we are not making the amendments originally proposed.

Mr. Patrick Jenkin: Will the right hon. Gentleman give way?

It being Ten o'clock, further consideration of the Bill, as amended, stood adjourned.

Ordered,
That the Social Security (Miscellaneous Provisions) Bill may be proceeded with at this day's sitting, though opposed, until any hour.—[Mr. Stoddart.]

Bill, as amended (in the Standing Committee), further considered.

Mr. Patrick Jenkin: I think that the Minister of State may have answered my question in his last three or four words. Is it right to say that the scheme that he now has on the Notice Paper is still properly described as an interim scheme?

Mr. Orme: The amendment is to put into legislative form what has been the practice of the Supplementary Benefits Commission over a number of years, which has taken into account a certain

amount of disregard on the parental contribution. That is the position. I am coming to an explanation that might meet the right hon. Gentleman's point. I shall, of course, give way if he wishes to take the matter further.

Mr. Andrew F. Bennett: Why is it necessary now to put this in legislation if the practice has been going on all along?

Mr. Orme: I shall explain that if my hon. Friend will be patient with me.
During the debate in Committee, reference was made to the survey carried out by the Office of Population Censuses and Surveys which suggests that 73 per cent. of students with assessed parental contributions—that is about half the student body—do not get all the money their parents should pay them. My hon. Friend the Minister of State, Department of Education and Science will be able to deal more fully with this, but I think I should make it clear at this point that the survey took no account of help given in kind, for example, by the provision of free board and lodging, nor of the probability that some of the students would have chosen not to accept the full amount because they were working in vacations and earning good money. In any case the principle remains that the parental contribution is payable under educational legislation and the Commission could not feel justified in making good any shortfall.
The Supplementary Benefits Commission allows no disregard on the students grant because it considers that to ignore any part of the assessed award—whether from local authorities or from parents—would be to provide twice over for the same need.

Dr. Keith Hampson: Is there not an inconsistency when the Minister of State says that this is not the place to debate parental responsibility for students when, in fact, that is now the argument that he is putting? In other words, it is parental help in kind which allows the Government to get off the hook in proposing this.

Mr. Orme: The hon. Gentleman argued that at great length in Committee, in a verbose speech. He may want to return


to the matter later, but he might hear out the argument.
Hitherto, the Commission has applied these policies by making use of its wide discretionary powers—I come to the point raised by my hon. Friend the Member for Stockport, North (Mr. Bennett)—to deal with exceptional circumstances. But its use of these powers in this way has now been challenged in the courts. The Commission's practice was no doubt acceptable when the numbers of students claiming benefit were small, but the dramatic increase in claims in the vacations over recent years makes the exercise of such powers for this purpose less appropriate. If the time came when in the absence of statutory authority the Commission could no longer exercise its discretion in these ways, the additional burden on public funds could amount to some £11 million per annum.
Furthermore, the administrative implications for DHSS offices would be extremely serious. The numbers claiming would increase enormously and the difficulties for the staff of determining whether or not a parental contribution had been made, whether in cash or kind, and placing a value on it would be quite intolerable. In fact, it would be open to widespread abuse. Valuable staff savings would be lost, and, indeed, additional staff resources might well be needed.
There seems to have been some misapprehension as to the effect the amendment would have. I cannot emphasise too strongly that it would make no difference to those students who have been able to get supplementary benefit in their vacations. The sole purpose of the clause is to give statutory backing to the Supplementary Benefits Commission's existing practices. It would make no difference to the terms and conditions under which the students concerned can claim supplementary benefit.

Mr. Cyril Smith: The Minister said that the clause would make no difference to the existing position because of the way that the Commission is now exercising its discretion. Does he agree that the clause takes away from the Commission the discretion that it now has?

Mr. Orme: The Commission has exercised that discretion right across the

board. It is interesting that the National Union of Students has not challenged this point. The challenge in the courts has been made by an individual without the support of the NUS as such. The Supplementary Benefits Commission, which takes a very liberal view and has a very good reputation for dealing with this matter, operates the disregard which has generally been accepted for the reasons which I have explained.

Dr. Hampson: I must correct the Minister—

Mr. Orme: No, the hon. Gentleman will not. I shall not give way. Therefore, he must wait his time.
If the students have needs which are not covered by the vacation element in their grant—for example, unavoidable rent commitments—they can claim supplementary benefit in the short vacations. It is worth adding that in the long vacation those who cannot get work can claim supplementary benefit in full beclause there is no vacation element in the grant for this period. I particularly emphasise that disabled students and those students who are lone parents would not be affected. They would continue to get supplementary benefit on the same conditions as at present.

Mr. Gerry Fowler: My right hon. Friend was at pains to explain the acute difficulties of the Supplementary Benefits Commission if it had to assess payment in kind as well as in cash during the two short vacations. How is it that those difficulties mysteriously disappear when it comes to the larger sums which are at stake in the long vacation?

Mr. Orme: It is much easier in the long vacation for students to obtain employment. It is pressure in the short vacations which creates the administrative problems to which I have referred. My hon. Friend will give some further details in that regard.

Dr. Hampson: Feeble!

Mr. Orme: I know that the hon. Member for Ripon (Dr. Hampson) is an expert. We shall no doubt hear from him. Meantime, perhaps, I may continue.
During the debate in Committee it was suggested that students should be paid supplementary benefit if they could produce evidence that they had not received


the parental contribution. That, I am afraid, is not really a practicable suggestion. It would put an impossible burden on the staff of the Supplementary Benefits Commission. However, if in a particular case a parent was suddenly prevented from paying the contribution during one of the short vacations, the Supplementary Benefits Commission would be able to use its discretionary power to prevent hardship pending the local education authority's reassessment of the award.
I commend the amendment to the House as the best way of ensuring, first, that students whose needs are not fully met by the vacation element in the grant can get supplementary benefit on exactly the same terms as at present and, secondly, that the Supplementary Benefits Commission need no longer rely so heavily on its discretionary powers in dealing with the vast majority of student claims in the short vacations.

Dr. Hampson: I apologise to the Minister for Social Security, but the fact that I rubbed him up the wrong way is symptomatic of the weakness of his case. He responded angrily to a perfectly reasonable and proper point.
I want to come to the point that I intended to make had I been able to intervene while the right hon. Gentleman was speaking. He totally misled the House when he said that the NUS was not supporting the appeal by Mr. Atkinson. The union is looking at the case with inordinate interest, because it is fundamental to the whole structure of the grant system. There is no difference between us. This is the centre of the case that the Minister is putting forward for this amendment.

Mr. Orme: I met the NUS, including the President, Mr. Clarke, last week. The union is watching the case, but it has not sponsored it, nor is it giving any financial support. In fact, until Mr. Atkinson took the case to court the union was not aware of it.

Dr. Hampson: With respect, the Minister is playing with words. When I talked to the NUS and local union officers, they said that they were basically in support of this case. This is fundamental to the whole situation and is precisely what the debate is about.

Mr. Cyril Smith: Does the hon. Gentleman accept that, whether or not the union supports this case, it is opposed to this clause and has written to scores of Members, including myself, stating its opposition?

Dr. Hampson: That was the reason for the Opposition voting against this proposal in Committee. It seems proper that as this case is in the courts the legitimacy of the procedure should be tested. The whole nature of student maintenance is getting to a chaotic and lunatic state. This is what the debate is all about.
It was the Minister who brought up all the arguments about parents giving help in kind, which allows the Government to go on perpetuating this mythical sum of money. In other words, one does not help students through the Welfare State because one says that they are getting money which they are not. That is an indefensible position. It might be practical politics if the Government were trying to save money, but that has to be taken in context with every other aspect of student maintenance.
I do not intend to dwell on this matter at the length that I did in Committee. One of my hon. Friends has the Adjournment debate and does not want to be here for half the night. At a time of high inflation, it is becoming difficult for the Government to maintain the real value of the grant, which is being eroded. The last increase was only 18 per cent., when the rate of inafltion was much higher.
This matter has to be considered also in the context of the increase of fees policy and the effect that that has on a whole range of students. It has to be taken in the context of the whole nature of the education policy, which is to encourage certain categories of students to come back into the system—for post-experience courses and vocational training. Many of them are on discretionary awards, now being cut.
There is a whole range of problems about student support, and in Committee we asked the Government to show us some sign of pulling together all the pieces and getting together all the Departments involved, which range from the Department of Education and Science to Industry, to the Minister's Department and to Employment. It was the Minister


in the last-named Department who announced in the House the change in the vacation element—the change in the right of students to claim for Christmas and Easter. All the various elements should be brought together.
As I said in Committee, every three years the Department reviews the structure of the grant and in between tops it up or changes the level. This sequel of events began well over a year ago. What has been happening during the past year? In Committee we pleaded with the Government to let us know. What has the Department of Education and Science said since the right hon. Member for Blackburn (Mrs. Castle) made the commitment to raise £15 million from students? I welcome to our debate the Minister of State, Education and Science. This is the first time in this debate that we have had an Education Minister here, and this debate is confined to the higher education service. 1 hope that when the Minister replies we shall hear about this. I want to know whether the Department is in favour of these changes.
10.15 p.m.
We do not mind whether students are denied the right to claim supplementary or unemployment benefits provided that they are compensated or maintained in some other way. We do not want them to live on the Welfare State, and we do not believe that students want to live off the Welfare State.
It is time—indeed it is long overdue—for a fundamental overhaul of the whole system of student maintenance. Since the Government began with social security proposals they have had well over a year to think about this. We pleaded with them to come back at this stage with something to say about it. We have had nothing. The Minister stuck slavishly to his brief and got more and more nettled as he went on. He reiterated word for word the various points he made in Committee. There was no fresh thinking on this matter.
The Minister said in Committee:
In the long vacation we do not intend to take away any benefit—in fact, students will be entitled to slightly more in the summer vacation,… the benefits to which students may be entitled are enhanced during the long vacation."—[Official Report, Standing Committee A, 25th January, 1977; c. 358.]

He went on to say that the savings were now £8 million. Will the £8 million come from the change in regulations? Will it be because of the extra being paid in the vacations, or is it also because the transfer from the unemployment account would have fallen on to the supplementary benefit—

Mr. Orme: The hon. Gentleman is getting two issues mixed. The amendment makes no public expenditure saving If it were not carried it would add £11 million to public expenditure in a full year. The regulation that we are talking about regarding unemployment benefit has first of all to be submitted to the National Insurance Advisory Committee and then brought to the House. That is completely separate. The amendment is not about saving but is about maintaining the status quo which is operated by Professor Donnison and the Supplementary Benefits Commission.

Dr. Hampson: That overlooks the murky history of this clause. When the Government found that they had got into total confusion about the situation they decided to change it. The Government have admitted time and again that there was to be a transfer from unemployment pay to supplementary benefit. That will cost a lot of money. In addition, because of the change that the DHSS made in February, there will be more claims on the supplementary benefit account.
I asked in Committee, and I ask again, whether the National Union of Students' campaign, and other general factors such as the difficulty of getting jobs for students, will result in the Department spending more. What are the estimates as to the level of claims and what are the costs involved?
The Government are now saying that we have a convention which the Supplementary Benefits Commission is to legalise. The Minister said that the activities of the Supplementary Benefits Commission were appropriate to deal with those exceptional circumstances. Apparently because of the increased numbers of students now claiming, this is no longer appropriate. The Government accepted the principle so long as the numbers were small. Because of the situation these days, with the costs facing the student


community, the whole inflationary question and various other disincentives —particularly for older people with families—such as hire purchase and mortgages, there will be increased claims. If there is a need and it is legitimate to pay needy cases in the first instance, why stop because there is an increase in numbers?

Mr. Orme: I am sure that the hon. Gentleman does not wish to confuse the House. The student grant has been brought to the level of the supplementary allowance in the short vacation. What we are saying is that any student who, over and above that, gets his supplementary benefit allowance if he is a married man, or if he has certain obligations, will be able to work in the long vacation and get qualifications, which I understand the hon. Gentleman wants to encourage. There will be no difficulty in that respect.

Dr. Hampson: That is the point I am trying to make—that all of this jiggery-pokery, this fiddling with notional amounts, ignores the fact that the Government have acknowledged the inadequacy of the present formal educational support system. The right hon. Gentleman is saying that he does not expect the present grant system to support students in vacations. He is saying that they will either get a job, which is unlikely at present, or they will be entitled to claim on his Department, and that will be—

Mrs. Audrey Wise: The hon. Member is completely confusing different threads in the argument, and it is a great pity, because there may be a valid case to be made. Can he not see that the question of the re-arrangement of the vacation element so that it falls entirely on the short and not the long vacation is a perfectly sensible thing to do so as to save administrative trouble in DHSS offices? Can he not accept that and go on to make any other points he may have which are valid? Let us hear the gist of his argument.

Dr. Hampson: If the hon. Lady has read the speech I made in Committee she will know that I have given the reason put forward by the Department. It was to do with unclogging the system. I accept that. I am trying to show Labour Members that they are focusing on a

narrow front when the whole question concerns the problem of student maintenance generally.

Mrs. Wise: Will the hon. Gentleman accept that in Committee he objected to students getting extra supplementary benefit during the long vacation—presumably because he did not understand the re-arrangement—and suggested that students who could get work preferred to stay at home—thus paving the way to people calling students scroungers?

Dr. Hampson: I thought that the hon. Lady was more perceptive than that remark suggests. That was a total distortion of the record. The vehemence with which she has made her comments is, presumably, no reflection on what I assume to be her general capacity to understand these matters. I made it perfectly clear that I was not advocating what she suggests. I was saying that the Government were building in incentives for people to claim supplementary benefits. Does the Minister deny that? They have built in positive incentives for students to live on the State. I agree that students are an easy target for the charge of scrounging. The public do not understand that the vast majority of students are not entitled to claim supplementary benefit and thereby live on the State during Christmas and Easter. This applies only to certain special categories.
All I am trying to do is to highlight the inadequacies of the whole student maintenance system and argue that this is not the way to make a change. I would much prefer that this subject be left to the discretion of local authorities. The Government are not keen to remove discretion from local authorities on other subjects. If the courts go against this and decide that this linked situation in which 73 per cent. of students are not getting the full contribution and about 35 per cent. are not being paid about £100 by their parents, is an inadequate system., that should force the Government to re-appraise matters and produce a different system. They have had a lot of time to think about this. Why have they gone ahead and taken the easy way out? The easy way is to ignore the anomalies and abuses in the system, the hardship which is apparent in the student community, and simply reinforce that inadequate system. I should like it all


to be thought through afresh But we have had no sign of contribution, no sign of new thinking, and no sign even of consultation with the Department of Education and Science. I hope that the Minister from the Department of Education and Science will enlighten us a little tonight.

Mr. Orme: Has the hon. Gentleman finished yet?

Dr. Hampson: I had almost finished, though there are several other points to be made. [Interruption.] The Minister is in a strange mood tonight. As I said before, I think that the reason is that his case is weak, and I hope that some of his hon. Friends will follow me in highlighting how weak his case is.
We are arguing that at this stage, until the court case is decided, it is inappropriate, inadequate and unnecessary for the Government to take these measures. On the last occasion when the matter was discussed, the junior Minister referred to the possible outcome of the court case—this is col. 404 of the Official Report in Committee—saying that one "must consider possibilities here". Indeed, so one must, here and now in the context of this Bill. Why not see what the court's decision is? For my part, I should not mind if it went the other way. I do not want to spend more money, but it would then be on the Government's shoulders to readjust the whole system so that we had a fairer system for encouraging students to take up education at the higher level.

Mr. Gerry Fowler: I have no sympathy whatever with the political stance of the hon. Member for Ripon (Dr. Hampson). He rightly recognises that the root of the difficulty in this clause lies in the parental contribution system. He appears to suggest that he or his party would change that system. Listening to the hon. Gentleman, one would never guess that the report which was the basis of the present student grant system, the report of the Anderson Committee in 1962, was initiated and implemented under a Conservative Government. One would never guess that in the period from 1970 to 1974 all proposals for the eradication or transformation of the parental contribution system were resolutely resisted by Conservative Ministers.
I have, in contrast, a great deal of sympathy with my right hon. Friend. I hope that he will forgive me if tonight I say "I told you so". I am rather relieved that he saw fit to withdraw the original clause, and I am relieved not least because, in a previous incarnation, I repeatedly said to colleagues "You may wish to put that forward, but you will never get it through the House of Commons". I was right, and certain other people were wrong. That gives me considerable pleasure.
I recognise my right hon. Friend's acute difficulty here. I shall not now refer at length to the Atkinson case, because it is still before the courts, but, as my right hon. Friend has rightly said, it is the doubt about the ruling of the courts which puts the Supplementary Benefits Commission in an extremely difficult position.

Mr. Orme: I thank my hon. Friend for what he has said and for the manner in which he is saying what he has in mind. His experience is well known to the House. I must tell him, however, that the Government changed their mind, on my recommendation and that of my hon. Friend, not on the basis that we could not get it through the House—we could have got it through the House—but because we felt that the arguments put by my hon. Friend the Member for Coventry, South-West (Mrs. Wise) and others, including, not least, those put by my hon. Friend himself, were correct.

Mr. Fowler: I do not think that we are basically dissenting. I used the phrase "You will not get it through the House", and I think that hon. Members on both sides will be familiar with what I mean. It does not necessarily mean that the Government cannot command a majority if they put the Whips on. It means, if they are a rational Government, that they recognise that they have lost the argument and that it would be unwise to push their luck.
As I was saying, it is the Atkinson case and the doubt about the legality of the ruling which has always been given by the Supplementary Benefits Commission which makes my right hon. Friend's amendment necessary. One must have every sympathy for the Supplementary Benefits Commission within the present grant structure, while there is


the parental contribution system. It would be difficult for it to assess need. Repeatedly it would not know whether the action of the student and his parents was collusive, or whether the claim was genuine. Indeed, there would be a temptation to collusion, to "cheating and scrounging", as Conservative Members have described it, which some weaker members of the community might find irresistible—though I hope that they would resist it. We would not want to encourage cheating and scrounging—least of all Conservative Members. I therefore assume that they will be supporting the amendment.
10.30 p.m.
Nevertheless, the basic difficulty remains, that if we decree that people shall be treated as adults for all other purposes at the age of 18, there is bound to be an anomaly when we also decree that for this one purpose they are dependent on their parents. My right hon. Friend in a sense recognised this when he said that the parental contribution was "payable" under education legislation. In a Finance Act, the word "payable" means that something is bound to be paid and that there are sanctions against those who fail to pay. In this context, however, it means that the son's or daughter's income is docked whether or not the parents pay.
It is sad that, because of the doubt about the law in a particular case, my right hon. Friend has had to bring forward an amendment which all of us on this side will regret. It withdraws the safety net provision of the Welfare State from one group. What disturbs me, and no doubt many of my hon. Friends, is that once that net is withdrawn from one group there may be a temptation for a subsequent Government, not necessarily of the same political persuasion, to withdraw it from others. The principle has been breached, and it is sad that it has had to be breached in this way.

Dr. Hampson: Does the hon. Gentleman now feel that it is time to reappraise the whole system of student support? Has he not argued in the past that there is ambiguity in combining an attempt to give greater educational opportunities to people of all classes and backgrounds with what he once described as the element of "prize-giving" in the notional

£50 which is there even for those who are not deserving? Does this not show that the philosophy of the system is not clear and should be re-examined?

Mr. Fowler: I am always flattered by the accuracy and detail with which the hon. Gentleman remembers my former pronouncements. It must be a mark of my former wisdom—whether or not I still manifest it.
I was going on to say that I hope that the Government will learn from this experience and will fundamentally reexamine the grant structure. Various ideas are worth considering. A standard one, which I have put forward many times myself, is that the grant should be paid in full and the parental contributions recouped through the tax system. Every time that suggestion is made the Inland Revenue objects. I sometimes think that one could start a blank piece of paper with the note "Inland Revenue objects" and then think of one's proposal, because its objections are all too frequent. There are real difficulties about it, and not simply the objections of the Inland Revenue. The parental contribution scale does not match with any precision the scale used in the deduction of income tax. It would be necessary, therefore, to revise the parental contribution system substantially if we were to operate in that way.
But there are other ideas worthy of examination. One could reduce the age of independence, which might have the effect of inducing students to take work before they take higher education and then receive a full grant. Similarly, one could reduce the qualifying period for a full grant by the time spent in full-time work. That would have the same effect. I hope that the Government will be attracted by both notions, for the simple reason that by encouraging students to undertake work before undertaking full-time study we might help bridge the gap between education and industry, to which my right hon. Friend the Prime Minister drew attention in his speech at Ruskin College some time ago.
There are possible solutions, or half-solutions. I hope that the Government will examine them with care. In the meantime I support my right hon. Friend, but with regret because of the breach of the principle. I simultaneously warn him that when he or others of my colleagues


on the Front Bench breach another principle, the contributory principle in unemployment benefit, with the order to which he referred there are those on the Labour Banches on whose support he may not be able to rely.

Mr. Cyril Smith: One of the things that I find nauseating about this place is the number of long speeches we must listen to from hon. Members, on both sides of the House, in which they explain why this or that should happen but go on to say why they will vote in the opposite direction to that in which their speeches take them. I shall be consistent in my opposition to the amendment. I opposed the principle as contained in the Bill on Second Reading, and I moved an amendment on the matter in Committee. I tabled an amendment to this amendment, and I regret very much that the Chair could not allow a separate vote on it, for procedural reasons that I fully accept and understand. I believe that there would be much more support in the House than in the Committee for my amendment, which was to delete:
notwithstanding that the contribution is not actually made"—
that is, the parental contribution. It seems to be that that is now the crux of the argument.
As we cannot vote on my amendment, I shall have no alternative but to vote against Amendment No. 15, although if it is carried I very much hope that Amendment No. 18 will be carried as well. I gather that the official Opposition will not vote against the Government amendment. It does not surprise me unduly that the official Opposition are not voting against the amendment or the clause. They made clear on Second Reading that they were not the friends of the students in this matter, that they did not take the students' view. They made clear then that they virtually supported the Government's proposals. What surprises me about the Opposition's decision tonight is that in Committee they voted against the very amendment that the Government have now proposed. I do not understand their lack of consistency, but no doubt it will be explained in due course.
I am disappointed that the Government intend to press on with the amendment,

because in my view it is grossly unfair to students. So that it is clearly on the record, particularly in view of the Minister of State's earlier statement, I would make it absolutely clear that the NUS is opposed to the amendment. Indeed, I have a letter in which it states:
We would urge you to oppose the Government if it resubmits this amendment for reconsideration to the House".
The letter is signed by Mr. Charles Clarke, President of the NUS, to whom the Minister referred earlier. The Minister smiles. I am not sure for what purpose. Perhaps it is a poor thing for me to pray him in aid but not the Minister's senior colleague who chose to pray him in aid earlier.
The amendment seeks to take away from the Supplementary Benefits Commission the discretionary power that it now has; that is to say, its discretion to regard or disregard parental contributions made to students in assessing entitlement to benefit or the amount of benefit to be paid. It is perfectly reasonable for the Minister of State to argue, as he did, that the Supplementary Benefits Commission has exercised that discretion in a particular way as envisaged in the amendment. I accept that as a statement of fact. But what matters is that in future that discretion will be taken away.
Therefore, even if the Supplementary Benefits Commission in future chose to exercise its discretion the other way in a particular case it would no longer be able to exercise it in any case whatever because we are taking away that discretion.
Let us assume that the case now before the courts were to go against the Government's point of view. By having passed this piece of legislation we shall be making sure that, whatever the courts say about the existing law, we can reply "we ain't allowing that to happen again in future". That is what this is all about. It is to make sure that in future parental contributions to students are taken into account whether or not the student has received that parental contribution.

Mr. George Cunningham: Surely the hon. Gentleman is not suggesting that the Supplementary Benefits Commission would want to exercise its discretion favourably in one case and unfavourably in another case? He is suggesting


that that is a desirable thing and that we are removing it. The Supplementary Benefits Commission has never operated on an inconsistent individual basis, nor would it think it right—nor would we—that it should do so.

Mr. Smith: My view is that that could happen in particular cases. I shall try to explain why. I said in Committee—I intended to make this point later—that if the Government were to introduce an amendment that placed the onus of proof on the student I would have considerable sympathy with that amendment, But they have chosen to ignore that suggestion by the amendment they have re-submitted this evening.
Let us assume that a student can prove conclusively to the Supplementary Benefits Commission that he had not received parental support. Despite that fact, the Supplementary Benefits Commission will be required to assume that he had received it for the purpose of assessing benefit if the amendment is carried. What I am arguing is that if the student can prove that he had not received it it would not be improper for the Commission to exercise its discretion in favour of that student.

Mr. Orme: That is the point. The Supplementary Benefits Commission has taken the decision it has because it is fair to all students. There would be collusion and administrative chaos if the amendment were defeated tonight. It is basically to protect the Supplementary Benefits Commission, and its operation, as much as anything else that the Government are moving this amendment.

10.45 p.m.

Mr. Smith: With respect, I am saying that there are cases where students can prove conclusively that, although they have been assessed as having to receive parental contribution, such contribution has not been received. In Committee I referred to two cases which came to me as Chairman of the Rochdale Education Committee. In one case, with the headmaster of the girl concerned, I had to plead with her father to fill in the form so that she could get a grant. He filled it in, but we knew that we could not get him, no matter what the amount he was assessed to pay, to make his contribution. He had no intention of paying

it and no one would drive him to do so. That is a statement of fact. There were two such cases.

Mr. George Cunningham: Then why did not the hon. Gentleman table an amendment to change the law so that parents were obliged to make parental contribution? That surely is the logical answer to the problem.

Mr. Smith: I bow to the hon. Gentleman's experience because I respect his ability, but I suspect that such an amendment would not be in order on this Bill and that it would be a matter more for an education Bill. I must admit that I had not considered such an amendment, but my conclusion is that it would have been out of order on a social security Bill.
I admit that Amendment No. 15 is a vast improvement on what the Government originally proposed. But what I object to strongly is the bit which says that even if the parent did not contribute, although he had been assessed to pay a contribution, that contribution will be taken into account in assessing the benefit. I submit that that is grossly unfair.
A man and wife with one child on an income of £54 a week are expected to make a parental contribution to the child at university and are assessed for the purpose. But, with inflation and the cost of living, that figure of £54 is very low. The level affects many workers and not only those for whom the Government would not have much feeling. It affects manual workers, skilled workers, engineers and miners—people who earn their living with their hands as well as those who earn it with their brains. The clause affects children in all classes of our society. It does not only affect children of the better-off classes.
Equally, it affects younger people because of the very stringent regulations which apply to students before they can be assessed as being of independent means—and even then one has to be 25 years old. The Department of Education and Science says that it accepts that more than 70 per cent. of students do not receive from their parents the amount of money which the student assessment says that they should receive. It is no use the Minister wriggling on this matter and saying that the statistics do not take


account of payments in kind, or talking about students who decline to accept contributions, and so on. If 70 per cent. is an exaggeration—and I am prepared to accept that it may be high—it does not alter the fact that a large number of students are not receiving parental contributions at such a level
I believe that there are working-class people who are unable to make the contribution for which the Department believes they are liable, because those parents cannot afford to do so. Therefore, some of us argued in Committee that we should have Education Ministers present so that we could consider a reshaping of the assessments to enable parents to make a lower contribution or to earn higher incomes before they were caught for contribution. However, the Department of Health and Social Security seems to ignore that argument.

Dr. Hampson: Is the hon. Gentleman saying that, as a matter of educational priority, an extra figure of £11 million should be spent in getting rid of the present contribution?

Mr. Smith: I should like to see the country move towards a system in which young people of 18, who are considered for any other purpose to be adults—for example, they can vote at 18 or go into the Forces at that age—would be treated as adults for assessment purposes in respect of grants. I accept that for economic reasons we cannot move overnight to a situation in which parental contributions are abolished. but there is much to be said for a gradual movement.

Mr. Patrick Jenkin: The hon. Gentleman is fond of speaking in favour of gradual movements that cost a great deal of money. He has already voted for extra expenditure of £138 million in a gradual movement in respect of the earnings rule. Will that matter have a higher priority than the parental contribution?

Mr. Smith: What that intervention demonstrates is that there is a great deal of difference between the economic policies of the Tory and Liberal Parties. [Interruption.] Although we believe in the reduction of wasteful expenditure, we do not go along with reducing public expenditure merely for its own sake. We

are concerned with the abolition of waste. If we were to banish waste, we would have much more money available.

Mr. David Steel: I hope that my hon. Friend will allow me to point out to his tormentors that it was during a Conservative Government in 1960 that the Anderson Committee recommended the total abolition of the parental contribution and that, although the Conservatives told us that we had never had it so good, they did very little about the situation.

Mr. Smith: Yes, certainly. An hon. Member opposite made that point earlier and it is relevant.
It is scandalous and dangerous to legislate in matters of social security payment not on the basis of the payments being paid in relation one income but on the basis of what one's income ought to be if only one had the income that someone else had said one was entitled to receive. That is what the amendment does. It says that whether or not a student has received from his parent that sum that a third person says he ought to have received, that sum must be deducted from any benefit to which he ought to be entitled. That was not the purpose of the National Insurance Acts. The purpose of those Acts was to ensure that nobody should fall below a certain standard of income or living. The amendment says that nobody's income should fall below a particular level whether the basis of arriving at that level has been achieved or not.
I said earlier, in reply to an intervention, that I would have accepted that the onus of proof should be on the student. That would be fair and reasonable. But as the amendment stands it should not be acceptable to the House. It is grossly unfair to students.
I want to deal with the suggestion that has been made tonight that if the rule referring to parental contributions is excluded it will lead to parents conniving to ensure that benefits will be payable to their sons and daughters. That is grossly insulting to thousands of parents in this country. It is saying to parents that they cannot be trusted and that they are potential liars. I reject that argument and the basis of that argument.
The Government amendment would have been acceptable if the words that I have suggested should be removed had been deleted, but because we are unable to force a vote on that point I shall vote against the amendment. Students are entitled to a fair deal, and if the amendment is carried they will not get a fair deal but a grossly unfair one. They will be treated in a way that will not be equitable to any other recipient of benefit under the National Insurance Acts of this country.

Mrs. Wise: Many of us on this side are pleased that the Government withdrew their original proposal that would have debarred students from receiving supplementary benefits during the short vacations. I am personally particularly grateful for the references made by the Minister to the force of the arguments which I and my hon. Friends put forward. It is gratifying to see that the Government can occasionally respond to the force of argument, and I am sure that the Minister can understand my pleasure.
However, I am also sure that the Minister does not expect us to forgo our right and duty to give an equally rigorous examination to any other proposals that the Government seek to bring before us. I am sure that he expects us to look carefully at all the arguments regarding this and any other new clause.
11.0 p.m.
It is unfair and a pity that my right hon. Friend's Department is carrying the burden of this discussion, because it is not really about his Department. It is about the Department of Education and Science, and the scheme introduced by the Conservatives. I am not surprised that hon. Members opposite are apparently going to maintain a reasonably gracious silence in this debate since it would ill become those who constantly call for reductions in public expenditure to challenge the principle of parental contributions.

Dr. Hampson: The Opposition have stated repeatedly that we do not approve of the anomalies in the grant system. This is a matter of policy. When the resources are available, we shall change the system. That is why we have asked the Government to tell us their thinking on the subject.

Mrs. Wise: The trouble with the hon. Gentleman's intervention is that this is not a matter of anomalies. The parental contribution is wrong in principle. It is wrong that adults should be regarded as dependent on their parents and wrong that they should be means-tested on the basis of incomes to which they have no legal claim. We who resist calls for cuts in public expenditure have the right to take part in the debate on this important point of principle. The Opposition do not have that right. They exposed their ignorance and their underlying feelings when they suggested that giving students the right to full supplementary benefit during the summer vacation was building into the system an incentive to stay at home. The fact that the right was given as a quid pro quo for students losing full benefit during short vacations apparently escaped hon. Members opposite.
There is a great danger in people being means-tested on income to which they have no legal claim, and I urge the Minister, and trade unionists, to consider the situation which would arise if that principle were applied to all young people. Many young people who are unemployed have never had the chance to build up a record of contributions, but they can claim supplementary benefits in their own right. If the principle of parental contribution to their upkeep were accepted, we should be back in the days of the 1920s and 1930s and the assessment of family income. As long as the principle is in existence, it is a danger not just to students but to all young people.
As I said, it is a pity that the DHSS is taking the burden of this debate. Its part in the affair is comparatively small. I am more concerned at the possible nonpayment of parental contribution during term times than during vacations because terms last longer. Whatever we do on this clause we shall not remedy the position of students during term time.
While the parental contribution system exists, I am reluctantly driven to the conclusion that the practical difficulties facing this Department may be insuperable when trying to decide whether, in most cases at least, a student is in receipt of a parental contribution. That will put the Department's officers in an invidious position.
But some cases are clearer. What will be the situation in a case where the parent dies or becomes ill?

Mr. Orme: Exceptional cases such as where a parent dies can be dealt with because other circumstances are brought into play. My hon. Friend the Member for Coventry, South-West (Mrs. Wise) was dealing with the principle of the grant, and my hon. Friend the Minister of State will reply to that part of her argument.

Mrs. Wise: I appreciate that reply, but I wish to challenge my right hon. Friend further. The amendment states that the resources of full-time students:
are treated as including any prescribed contribution notwithstanding that the contribution is not actually made".
There is nothing in the amendment which says "except in exceptional circumstances" or "except in cases of death or illness". The amendment appears to be categoric.

Mr. Orme: I can assure my hon. Friend that these circumstances are covered. If possible, technical details to explain the situation will be given tonight. If not, I shall write to her.

Mrs. Wise: I thank my right hon. Friend. But will be understand that I must press this matter because we are dealing with what is on the paper and it is important that it is crystal clear. How far does discretion go? Does it cover the death, illness or unemployment of parents? On what basis will discretion be operated? Nothing is on paper, and I have a predilection for actually seeing things in black and white. I am not looking for difficulties but I wish to be reassured.

Mr. Orme: I now have a form of words which might help my hon. Friend. I was sure of my case before. The words are: "The discretionary powers of the Secretary of State are not affected to deal with exceptional cases".

Mrs. Wise: I again thank my right hon. Friend. It has been worth pressing to receive that reply. My many friends in the National Union of Students will take note of that reassurance. I am afraid we are stuck with the amendment. I regret that, but hon. Members on this side of the House can listen to arguments and I am afraid that we cannot solve the prob-

lems brought by the parental means test by merely objecting to this clause.
The question of unemployment benefit regulations on students has been introduced repeatedly into the debate, although rather mysteriously, on Second Reading, in Committee and tonight. I am very much of the view, having given the matter the customary rigorous examination to which I referred earlier, that many Labour Members will be quite unable, when those regulations come before us, to accept a principle that anyone who actually has a contribution record which entitles him to unemployment benefit should be denied that unemployment benefit. Therefore, I trust that my right hon. Friend will not seek to assume from the somewhat conciliatory tone of my remarks tonight that this conciliation extends further than this amendment. However, once again I thank him for the withdrawal of the previous very objectionable clause.

Dr. Glyn: The hon. Member for Coventry, South-West (Mrs. Wise) has succeeded in extracting from the Minister one very important point—that he has a residual power of discretion. That is not at all clear from the drafting of the amendment.
I take issue with the Minister on one point. At the beginning of his speech he said that this had nothing to do with parental contribution. It must have something to do with that, because the whole thing is to cover parental contributions. A child who reaches the age of 18 can vote and do almost everything, except conveyancing, but yet the parents have a responsibility. Where I quarrel with the Minister is on the point that this is not the right place to deal with this matter. My hon. Friend the Member for Ripon (Dr. Hampson) was quite correct. The proper way of tackling this matter is through education channels and not social services.
It is curious—the Minister will correct me if I am wrong—that Clause 12 is the only clause which refers to supplementary benefits. Every other clause refers to social security. I wonder whether the Title of the Bill ought to be altered to "Social Security and Supplementary Benefits Bill", because they come under different Acts.
Be that as it may, this is not the right place for this provision to be put in. It


must be being put in simply for the convenience of the Government. Anything could have been slipped in here. We could have had all sorts of clauses. It could have been said that nothing should be available to strikers. All sorts of things could have been put in. This is quite the wrong place to make an amendment of this type.
Whatever may be the arguments about parental contribution, I hope that in the future the whole of university education and futher education can be dealt with by one Department only. That would be in the interests of both students and the administration.

The Minister of State, Department of Education and Science (Mr. Gordon Oakes): I vey much welcome the opportunity to intervene in the debate, and to do so fully in support of the amendment moved by my right hon. Friend the Minister for Social Security. I know that in Committee criticism was expressed that no Minister from the Department of Education and Science was present. Alas, Department of Education and Science Ministers are not responsible for choosing the composition of the Committee. Being a law-abiding citizen, I, and my Department, chose to intervene on the Floor of the House on Report. It would have been entirely wrong of me imperiously to go into a Committee, the composition of which had been decided by Mr. Speaker and his staff, attempting to give that Committee a Department of Education and Science view, which ought to have been well known to experienced Opposition Members. However, the opportunity is now here. I take this opportunity to repeat fully my support of the amendment.
Let us look briefly back at the purposes of the Bill and at its Second Reading in a paragraph. What we were concerned to do in the Bill, among other things, was to look at public expenditure. That is something of concern to the whole House—not only Labour Members but Opposition Members, I presume, because Opposition Members talk of almost nothing else but public expenditure, especially on the social services. We were concerned to look at ways in which we could possibly save public expenditure without doing harm or damage.
11.15 P.m.
The original Clause 13 dealt with students and their rights to supplementary benefit in the Christmas and Easter vacations, not the long vacation, because, in fairness, it is a matter of doubt whether they are truly available for work in the normal sense.
We considered that matter when the Bill came before the House on Second Reading. My right hon. Friend listened to what was said both in the House and in Committee, particularly by my hon. Friend the Member for Coventry, South-West (Mrs. Wise) and others, and to voices outside. As a result the Government felt that it was unfair to deal with students in the way proposed originally. I should have thought that hon. Members on both sides of the House would say "What a good, democratic Government, because they listen to what is said and they try to implement what they hear".
My right hon. Friend the Minister for Social Security was rightly praised by the hon. Member for Rochdale (Mr. Smith)—we are from the same part of the world—because he does indeed understand students. My right hon. Friend understands not only working-class students but all students, because one of the finest universities in the country is, if not in his constituency, at least in the metropolitan district. My right hon. Friend listened not only to the students but to the voices raised both inside and outside the House, and as a result produced this amendment, the effect of which is "We restore the status quo and enshrine it in legislation in case of any difficulties which may result to the detriment of students." That is what the hon. Member for Rochdale missed.

Mr. Cyril Smith: The hon. Gentleman does not know what he is talking about.

Mr. Oakes: The hon. Gentleman comments that I do not know what I am talking about.

Dr. Hampson: Dr. Hampson rose—

Mr. Oakes: I shall not give way. We enshrine it in legislation so that the discretionary power of the Supplementary Benefits Commission is preserved by statute.

Mrs. Wise: Mrs. Wise rose—

Mr. Oakes: I am sorry. I shall not give way. I want to intervene only briefly. I shall deal with my hon. Friend's point shortly.

Mr. Cyril Smith: The discretion is not enshrined.

Mr. Oakes: I want to deal only with the education arguments. The social security arguments will be dealt with by my right hon. Friend or the Under-Secretary of State.
I was intrigued to listen to the hon. Member for Ripon (Dr. Hampson), but I found his arguments difficult to follow. I admire many of the hon. Gentleman's contributions on education—I pay more regard to what he may say about education than I do to the divergent views which I hear expressed from the Opposition Front Bench—but tonight he made some remarks which I found intriguing. He wanted to know the Government's view on students' grants in general. I hesitate to go too far in that respect, because you, Mr. Speaker, would rightly point out that I should be out of order on Clause 12.
The hon. Member for Ripon wanted to know the Government's attitude towards the very different system that he wanted to establish. Then in an intervention he said that Conservative Party policy, particularly with regard to parental contribution, was to present a completely new system and to deal with it when resources were available. I agree with the hon. Gentleman. I should love to deal with the situation when resources are available. Is the hon. Gentleman saying that resources are available to deal with it? If he is, I do not think that that is the view of his party, or of the House generally. We should love to deal with this issue when resources are available, but I tell the hon. Gentleman and the hon. Member for Rochdale that to abolish parental contributions would, under the present system, cost £120 million of public money. Even to allow for the child benefit allowance would cost £55 million of public expenditure.
That could be one of the results of the hon. Member for Rochdale's theoretical amendment. I can see his point that if a student is not paid benefit by his parents he is entitled to claim that benefit from the State. Nevertheless, the

hon. Gentleman must agree that to allow an open-ended scheme like this would be a temptation to abuse. If someone who could afford to pay deliberately did not so do, the honest parent who paid would become a laughing stock. How can my right hon. Friend allow an open-ended commitment like that? What would Conservative Members say if we left a situation that could be exploited in such an indiscriminate way?

Dr. Hampson: We are not asking that. We always dissociate ourselves from the Liberal position on this. We do not regard it as an immediate priority for spending. But does the hon. Gentleman accept that what has happened is that another Department, without consultation with his Department, has decided to tinker with part of the system by adjusting and trying to find savings? Is it not better to look at the whole package of student support rather than make cuts in one aspect of it?

Mr. Oakes: It is not true that my right hon. Gentleman and his Department did not consult my Department. Of course they consulted us. We were looking at public expenditure. We were looking at the position with regard to the long vacations as well as the short ones. If public expenditure savings had to be made without imposing undue burdens on students we were determined—and I am sure that my right hon. Friend will agree with this—to preserve the right to supplementary benefit during the long vacation, especially at a time of high unemployment. There was consultation between the Departments, and after listening to the voice of the House and to voices outside the House my right hon. Friend decided to amend the Bill to the benefit of students—something about which I should have thought the hon. Member for Ripon would be delighted.
I agree with the hon. Member for Ripon that in Committee he did not vote for the Liberal amendment on this matter, and that brings me to the point made by the hon. Member for Rochdale. Of course the hon. Gentleman has been consistent, as the Liberal Party so often is, but it has been a consistency of total irresponsibility. It is easy for someone in the hon. Gentleman's position to say that public expediture does not matter, but, as I pointed out. the figures could


be £120 million, or £55 million, of public expenditure, even given the child benefit scheme.
It is easy for the hon. Member for Rochdale to say that his party did not introduce this scheme, that his party was not in power in 1962 and it was the Conservatives who did it, and that what is happening now is being done not by the Liberal Party but by a Labour Government. If the hon. Gentleman and his hon. Friends were in office they would have to have regard to public expenditure, and it is a cheap way out to make the point about consistency. I give the hon. Gentleman credit for being consistent, but it is a consistency of complete irresponsibility with regard to public expenditure.

Mr. Cyril Smith: In view of the Minister's earlier statement that all the amendment does is to enshrine the existing situation in legislation, and as I merely want not to enshrine it in legislation by voting against the amendment, why is that reckless, and why does it increase public expenditure, and so on. There is something illogical in the Minister's argument.

Mr. Oakes: It is because the hon. Member could put £11 million of public money at risk by the pursuit of his amendment. That is quite apart from the open-ended nature of the amendment, which must be regretted from an accountability point of view. The hon. Member also commented on the figures that had been given about students not receiving their full grant from their parents. I regret this very much. The figures were worked out very carefully.
It does not follow that if a student is not in receipt of the full grant he is not getting any money from his parents. There may be a small shortfall. He may not be suffering hardship. The parents may well be contributing in other ways, by help during the vacations or by providing food I know that this happens. Many parents pay the full contribution and also provide such assistance. It does not follow that a person not getting the full parental contribution is suffering such hardship that he has to claim social security benefit.
My hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham) asked the hon. Member for Rochdale whether it would not be better to

introduce legislation which would make parents pay the grant. I do not think that is a good idea. We would have sons and daughters bringing actions against their parents in the courts. That would be entirely wrong. No one would like that. Although I adjure parents to pay for the benefit of their son or daughter at university or college I would be reluctant to ask the House to introduce legislation aimed at such family type actions.
My hon. Friend the Member for The Wrekin (Mr. Fowler)—my distinguished predecessor—made the point that students are counted as adults for other purposes but when it comes to grants they are treated as dependants. Regrettably this is so. Like him, I would like to see this provision changed as soon as economic circumstances permit. My hon. Friend said that this withdraws the safety net provision. That is not so. It reinforces that provision.

Mrs. Wise: Will my hon. Friend substantiate his claim that the safety not provision is reinforced? I cannot see one word which reinforces anything on behalf of students.

Mr. Oakes: I hesitate, as would any prudent Minister, to enter into a long argument on a subject which relates to a colleague's Department. At the moment the Supplementary Benefits Commission has a purely discretionary power, and the proposal before the House will give statutory reinforcement to its right to exercise that discretionary power.

11.30 p.m.

Mr. Gerry Fowler: I think that my hon. Friend would do better to rephrase that and say that the amendment will reinforce legislatively the manner in which the Supplementary Benefits Commission has interpreted its discretion. In other words, it will now say that by law it does not have to pay supplementary benefit, whereas previously it was merely by convention. How that is supposed to help students is utterly beyond my comprehension, I must confess.

Mr. Oakes: But my hon. Friend must take that in the context of the whole scene and the right of the Supplementary Benefits Commission to exercise its discretion in favour of the type of students to whom my hon. Friend the Member for Coventry, South-West referred, in


circumstances where in the interim a parent has died, where eventually the grant system will be changed, but where in circumstances of immediate need the commission can exercise its present discretion to make a payment.
I do not want to delay the House further. [HON. MEMBERS: "Hear, hear."] Hon. Members may say that, and I agree with them, but they asked that my Department should enter the debate to deal with the education matters. I have tried to do that, without going in depth into the matters which are the concern of my right hon. Friend's Department, although of course, I have touched on them. I fully support the amendment moved by my right hon. Friend.

Mr. Patrick Jenkin: I shall not detain the House long at this hour, but, having heard the Minister of State for the last 10 minutes, I am beginning to understand why the Minister for Social Security felt that he could do without his assistance in Committee. The right hon. Gentleman has been rather like the Grand Old Duke of York—he really has led the House up the hill and down—but at least the Grand old Duke of York did not have somebody standing at the bottom of the hill to say that the object of the exercise was to reinforce the bottom of the hill, which is what the Minister of State has done. His suggestion that somehow the Government's amendment reinforces a student's right to supplementary benefit is absurd, and I am surprised that he put forward such an argument.
I think it a great pity that the Minister of State, coming here from the Department of Education and Science, did not use the opportunity to give his Department's reaction to the very firm recommendation of the Chairman of the Supplementary Benefits Commission that the financing of students should not be the function of the commission. This is what Dr. Donnison said in a paragraph 5.11 of his annual report:
it considers that the needs of students should be looked at as a whole, in an integrated grant system designed to provide for students' vacation as well as term time maintenance. In this way, responsibility for student support would rest wholly with the Department of Education and Science, the Scottish Education Department and the local education authorities who, unlike the Commission, are expert in the

education field and are in a far better position to make judgments about the particular needs of individual students.
We have come back to that recommendation time and again and asked the Government to give some indication of their reaction to it, on behalf of the Secretary of State for Education and Science. If it is the Secretary of State's view that it is a wholly impractical suggestion and that the Supplementary Benefits Commission must go on in perpetuity providing a safety net for students the Minister of State should at least have had the courage to say so. Or if the Government accept the recommendation in principle and will now work towards implementing it, he could have said that. But all he did was give us a great deal of flannel which added nothing whatever to the debate, and I very much regret that in Committee I ever suggested that he should come, for I honestly believe that he has been wasting everyone's time.
What position have we now reached? The hon. Member for Rochdale (Mr. Smith) suggested that, as I should be advising my hon. Friends that we do not oppose the amendment—[HON. MEMBERS: "0h."] Yes, of course, and I shall explain why. This is a different stance from that which we adopted in Committee. I can only suggest that the hon. Member for Rochdale did not read the very clear exposition of the point of view of the official Opposition that I set out at column 414 of the Committee proceedings on 27th January. I took the view that we had to react to the recommendation of the Supplementary Benefits Commission, not so much in the interests of the Commission—the point made by the right hon. Gentleman—but in the interests of the generality of the clients of the commission. They are the ones who suffer if during the Christmas and Easter vacations offices are filled with hundreds of students seeking to eke out their grants by drawing supplementary benefit.
The Bill—not as originally intended—goes some way to try to meet that case. For that reason we regard half a loaf as better than no bread. Therefore, we do not oppose the Government's new clause. But we still want to make it absolutely clear that in our view we need a very much better response to Dr. Donnison's recommendation than we have had from the Department of Education.
There are two other matters to which I wish to refer. With this amendment is being taken Amendment No. 18, which concerns disabled students. We have tabled the amendment again because, although assurances were given upstairs in Committee on the question of disabled students, it would be absolutely right that handicapped students whose disabilities are likely to prevent their being able to obtain employment at all in the Christmas vacation should be able to obtain supplementary benefit.
We think that it would be added protection if a clause on these lines could be included in the Bill. If it is not, if the Government feel that it is unnecessary, at least they should give us, on the Floor of the House, a reassurance in favour of handicapped students, who deserve the utmost sympathy. We do not wish to deprive them of the protection that they should have, because, as well as being students, they are handicapped, by definition, and therefore, the resources of the Welfare State should be available to make sure that their passage through their careers as students is made as easy as possible.
The other point is one that I raised briefly in Committee. It concerns the story that appeared in The Guardian on 27th January, saying that
The Department of Health and Social Security confidentially ordered all its regional offices to 'actively discourage' tens of thousands of students from claiming supplementary benefit at Christmas—when they were legally entitled to do so—it was disclosed last night.
The right hon. Gentleman suggested that his hon. Friend the Member for Walsall, South (Mr. George), who was on the Committee, might like to put down a Question because he was also interested in the answer. I shall not read the entire answer that the hon. Gentleman received on 28th January. I shall read just one sentence, which leaves me floundering.

No instructions have been issued specifically for the last Christmas vacation, but operational guidance was given on ways of handling claims."—[Official Report, 29th January 1977; Vol. 924, c. 788.]

That is quite absurd. I do not necessarily say that it was wrong, because the change in the grant arrangements was made as long ago as last February and was intended to apply to this Christmas and Easter vacations. But it would have been wrong for the Government to attempt to tell the commission that there was statutory authority for treating the parental grant as having been paid even when it was not. As I understand it, however, the Department did not try to do that, but to try to hide behind the disclosure by saying that these were not instructions but operational guidance seems jejune. Perhaps the Department would like to explain that.

Broadly, by the amendment, the Government are going part of the way to try to meet the recommendation of the Supplementary Benefits Commission. I accept the argument that it would be inconsistent and impracticable to leave the Supplementary Benefits Commission to determine the whole question of parental contributions. If that is the basis on which the Liberals propose to vote against the amendment, they are being even more irresponsible than usual and totally leaving out of account the impossible problems for clerks in supplementary benefit offices. The matter should not be dealt with within those offices at all—it should be a matter for the Department of Education—but while it has to be dealt with there I see no alternative to the Government's proposal. Therefore, if the matter goes to a vote, I would not advise my right hon. and hon. Friends to oppose the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 116, Noes 23.

Division No. 69]
AYES
[11.40 p.m.


Anderson, Donald
Brown, Robert C. (Newcastle W)
Cunningham, G. (Islington S)


Archer, Peter
Buchanan, Richard
Davidson, Arthur


Armsrong, Ernest
Butler, Mrs Joyce (Wood Green)
Davies, Bryan (Enfield N)


Ashton, Joe
Callaghan, Jim (Middleton &amp; P)
Deakins, Eric


Barnett, Guy (Greenwich)
Carmlchael, Nell
Dean, Joseph (Leeds, West)


Bates, Alf
Cocks, Rt Hon Michael
de Freltas, Rt Hon Sir Geoffrey


Bean, R. E.
Cohen, Stanley
Dempsey, James


Bennett, Andrew (Stockport N)
Coleman, Donald
Dolg, Peter


Bidwell, Sydney
Cox, Thomas (Tooting)
Dormand, J. D.


Bray, Dr. Jeremy
Crowther, Stan (Rotherham)
Douglas-Mann, Bruce


Brown, Hugh (Provan)
Cryer, Bob
Dutty, A. E. P.




Dunn, James A.
Lyons, Edward (Bradford W)
Silverman, Jullue


Eadle, Alex
McElhone, Frank
Small, William


Ellis, John (Grigg &amp; Scun)
MacFarqunar, Roderick
Smith, John (N Lanarkshlre)


Ellis, Tom (Wrexham)
Magee, Bryan
Snape, Peter


English, Michael
Mallalieu, J. P. W.
Spearing, Nlgel


Ennis, David
Marks, Kenneth
Spriggs, Leslle


Evans, Fred (Caerphilly)
Marshall, Dr Edmund (Goole)
Stallard, A. W.


Ewing, Harry (Stirling)
Meacher, Michael
Stewart, Rt Hon M. (Fulham)


FauIds, Andrew
Mendelson, John
Stoddart, David


Fernyhough, Rt Hon E.
Morris, Alfred (Wythenshawe)
Thomas, Mike (Newcastle E.)


Foot, Rt Hon Michael
Morris, Charles R. (Openshaw)
Tinn, James


Forrester, John
Murray, Rt Hon Ronald King
Urwin, T. W.


Fowler, Gerald (The Wrekln)
Newens, Stanley
Varley, Rt Hon Erlc G.


Fraser, John (Lambeth, N'w d)
Oakes, Gordon
Wainwright, Edwin (Dearne V)


Garrett, John (Norwich S)
Ogden, Eric
Walker, Terry (Kingswood)


George, Bruce
O'Halloran, Michael
Ward, Michael


Grant, John (Islington C)
Orme, Rt Hon Stanley
Wellbeloved, James


Hamilton, James (Bothwell)
Park, George
White, Frank R. (Bury)


Hardy, Peter
Pavitt, Laurie
Whitlock, William


Harrison, Walter (Wakefield)
Price, William (Rugby)
Williams, Rt Hon Alan (Swanaea W)


Hooley, Frank
Roberts, Albert (Normanton)
Wilson, Alexander (Hamilton)


Hunter, Adam
Robinson, Geoffrey
Wilson, Rt Hon Sir Harold (Huyton)


Jackson, Colin (Brighouse)
Roderick, Caerwyn
Wise, Mrs Audrey


Jackson, Miss Margaret (Lincoln)
Ryman, John
Woof, Robert


Lamond, James
Sandelson, Neville



Lestor, Miss Joan (Eton &amp; Slough)
Sedgemore, Brian



Lewis, Ron (Carlisle)
Selby, Harry
TELLERS FOR THE AYES:


Lomas, Kenneth
Shaw, Arnold (Ilford South)
Mrs. Ann Taylor and


Lyon, Alexander (York)
Silkin, Rt Hon S. C. (Dulwich)
Mr. Ted Graham.




NOES


Bain, Mrs Margaret
Mikardo, Ian
Thompson, George


Canavan, Dennis
Ovenden, John
Thorpe, Rt. Hon Jeremy (N Devon)


Crawford, Douglas
Penhallgon, David
Wainwright, Richard (Colne V)


Henderson, Douglas
Reid, George
Watt, Hamish


Howells, Geraint (Cardigan)
Richardson, Miss Jo
Wilson, Gordon (Dundee E)


Johnston, Russell (Inverness)
Skinner, Dennis



Latham, Arthur (Paddington)
Smith, Cyril (Rochdale)
TELLERS FOR THE NOES:


MacCormick, Iain
Steel, Rt Hon David
Mr. Clement Freud and


Maynard, Miss Joan
Stewart, Rt Hon Donald
Mr. A. J. Beith

Question accordingly agreed to.

Amendment made: No. 16, in page 12, line 1, leave out
'the Supplementary Benefits Act 1976'
and insert 'that Act.'—[Mr. Deakins.]

Clause 18

OTHER MISCELLANEOUS AMENDMENTS

Mr. Deakins: I beg to move Amendment No. 20, in page 17, line 17 at end insert—
'(2A) At the beginning of paragraph (b) of section 43(2) and paragraph (b) of section 65(2) of the principal Act (which as amended by the Child Benefit Act 1975 require the contributions mentioned in those paragraphs to be over and above those required for the purposes of section 23(1) (b) of the latter Act) there shall be inserted the words "except in prescribed cases,"'.

Mr. Speaker: With this we may take Government Amendment No. 29.

Mr. Deakins: These amendments are primarily of a technical nature. Sections 43(2) and 65(2) of the Social Security Act 1975, as amended by the Child Benefit Act 1975, make provision for the care of

a person claiming an increase of benefit—for example, sickness benefit or injury benefit—in respect of a child who is not living with him and whom he is under an obligation to maintain. He must make requisite contributions to the cost of providing for the child, and in particular he must contribute not only an amount equivalent to the dependency benefit he receives for the child but also an amount equivalent to the child benefit which he receives for that child.
There is, however, a special category of claimants, consisting of men separated or divorced from their wives with whom their child is living, who cannot qualify for child benefit though they will be able to qualify for dependency benefit by virtue of regulations replacing existing Sections 42(3) and 64(4). Those sections are being repealed by the Child Benefit Act.
It is the intention that in future, as in the past, such beneficiaries should have to contribute an amount equivalent to the dependency benefit towards the cost of providing for the child, but without the


need to contribute any additional amount on account of child benefit for which, as already mentioned, they will not be able to qualify. Doubt has been expressed as to whether amendments made to the Social Security Act by the Child Benefit Act allow regulations to be made to achieve this and the present amendments will put the matter beyond doubt.
The amendments to the Social Security Act need to come into operation from 4th April, a few days after Royal Assent is expected to this Bill because that is the date when payments of child benefit will begin.

Mrs. Chalker: The point of calling this a miscellaneous provisions Bill is well proved by these two small enabling amendments. I have only one question, because we have now had a further clarification, through the amendments, of a situation in connection with child benefit, which will become payable from April.
The hon. Gentleman has told us that it will now be a special category of claimant who will not be eligible to claim the child benefit. He has further explained that dependant's allowance will still be permitted in these cases. All this matter will be covered in the regulations enabled by these amendments.
Following our Child Benefit debate last week, and without straying out of order, I hope that it will be possible for the hon. Gentleman to tell us whether all the uncertainties, as I must still call them, in the memorandum of 28th January from the Minister for Social Security will require regulations which might, at the moment, be outside the scope of the amendments that could be made under the same difficulties that the hon. Gentleman has described on these amendments.
If the hon. Gentleman needs amendments to allow the necessary regulations for the special category of claimant not having eligibility to child benefit now, will he need other amendments to permit the regulations to offset the disregards which currently are not covered in any of our legislation? Otherwise I am happy to accept the amendments.

Mr. Deakins: As I understand the position, no further legislative amendments are needed to cover the remaining regulations needed for the child benefit

provisions. However, I take the point made by the hon. Lady, and, of course, we have the stage yet to come in another place, although we hope to keep it as short as possible in view of the timetable for the Bill. But I do not envisage that any further amendments will be needed on this point.

Amendment agreed to.

Mrs. Chalker: I beg to move Amendment No. 24, in page 17, line 44, at end insert—
'(6) In sections 35(7) and 45(1) of the Pensions Act, for the words "the Scheme's normal pension age", there shall be substituted the words "pensionable age".'.
This is a reincarnated form of Amendment No. 69 which we moved in Committee. I have noted that in the report of our Committee proceedings I am printed as saying "I bet to move". I hope that that misprint can be corrected because earlier this evening I would have said "I bet the Government will say 'no' to me again". However, I gather from whispers across the Table that the Government are feeling more inclined to Amendment No. 24 than they were to Amendment No. 69 in Committee. I make no apology for tabling the amendment again, because there is a background to the situation which should be explained and put correctly.
The late Brian O'Malley accepted that in our pensions legislation employers would be reluctant to accept an open-ended liability to revalue guaranteed minimum pensions in line with increases in national average earnings for employees who were early leavers—people who left before their retirement date.
A special problem exists when an occupational pension scheme has a normal pension age below that of the State pension age. In Committee the amendment we moved on this aspect was resisted by the Government. The strongest reasons for the amendment were that it would be difficult for members of a pension scheme to elect an option to provide a better pension for a widow, or commute part of the pension for cash, as long as they could be in a worse situation than the law as it stood would put them.
In Committee I asked a number of questions which the Minister could not


then answer. But he used three arguments which must be corected in the House even if he is looking favourably on this amendment. It is nonsense to say that our proposals would mean that extra costs would fall on the State scheme. The costs involved are identical with the costs that would arise if all schemes for pensions involved some members retiring five years early. Presumably the Minister would not suggest that our proposals would present unacceptable dangers.
12 midnight.
The Minister in Committee was certainly not kind to the Government Actuary, but he has had some more information since that debate. We must have a situation in which the fixed rate of 8½ per cent. and the limited rate of 5½ per cent. are designed to be equivalent to the full valuation, and that would not be an unfavourable situation.
Furthermore, the Minister said in Committee—and we took great exception to this suggestion—that the amendment would be a step towards a general fixed rate valuation—in other words, for people ceasing to contract out at any age. There is no substance in that comment, and I hope that he will retract it in the light of information which he has received since 28th January. The provision is related to normal pension ages and is strictly governed by the requirements of the Inland Revenue. There is no danger of its being extended downwards to lower ages.
I shall be delighted if the Government accept the amendment because, although we appreciate that some problems arise from the recent decision by the miners to accept an earlier retirement age, we believe that if our amendment were not accepted other unions would shortly be knocking at the Government's door saying "Why can this be done for the miners but not for other occupational pensions that fulfil the same situation?"
The Government obviously have been slightly persuaded by the outcome of their discussions with the National Union of Mineworkers. I look forward to seeing this provision on the statute book because it will clarify and rectify a large number of worries which the pensions industry has had before it for a long time.

Mr. Deakins: My right hon. Friend and I have given much thought to the points that were made in Committee on this topic, and he and I are conscious of the depth of feeling on this matter on the part of the pensions interests, as expressed by their representatives at a recent meeting with officials when a number of points on this and other matters were clarified.
The Government, in the spirit of the partnership so assiduously nurtured over the long months of debate on the Social Security Pensions Act and illustrated more recently in Committee, have no wish to be intransigent on this issue. Accordingly, we accept this amendment, subject to tidying up any technical drafting matters that may be found necessary in consequence. I hope that this further substantial concession will remove any doubts that may have existed about the Government's determination to get our momentous new pensions scheme off to the right kind of start, with the co-operation of all concerned.

Amendment agreed to.

Mrs. Chalker: I beg to move Amendment No. 25, in page 18, line 1, leave out 'Secretary of State' and insert 'Occupational Pensions Board'.
I do not wish to offend the Minister but wish only to assist him on this amendment. During the debate on Clause 19 in Committee, he made a masterful attempt to answer some of the technical points upon which I had been briefed, but some differences remained and it became obvious by the end of the debate in Committee on Government Amendment No. 66 that there were a number of technicalities left unanswered and many doubts still to be resolved. It seemed to us that the body that could help the Minister resolve those doubts was the Occupational Pensions Board. Not even the Minister's own Department could, in the short term, give him the answers to the fairly general questions that had been raised.
Therefore, we felt that it would be a good idea to explore transferring the responsibility, from the Secretary of State to the Occupational Pensions Board, in respect of the issue of certificates upon the alternative solvency test that was the purposeof Amendment No. 66 in Committee. This amendment is intended to


allow further discussion on questions raised, but it also has its own reason. In this highly technical field, it would be much better to have the direct involvement of the Occupational Pensions Board which decides upon the alternative solvency test. That body will decide whether the conditions for contracting out and the insurance given by an employer wishing to contract out of the State pension scheme are sufficient to allow that. The OPB will advise the Department which will, in turn, advise the Minister. We all know that things that pass through three pairs of hands sometimes become slightly different in the handling. It would be far better if the OPB were directly concerned with the running of the alternative insolvency test. The Minister implied this when he said in Committee that the meaning of Clause 19—now Clause 18—fell to be answered by the OPB.
For practical reasons, it is a bad thing to have a removed approval process, and that is what we shall have, if it is left to the Secretary of State to make the decision. The OPB has the knowledge. The powers of the Secretary of State contained in Section 5 of the Social Security Pensions Act are sufficient for him to retain control over the OPB. If it were thought that the OPB was getting out of hand, the Secretary of State would not be inhibited from taking decisions in the interest of the pensions industry and developing strong second pension provision in this country.
If the OPB was vetted by the Department over every case it would multiply work and would not achieve the greater flexibility of the Social Security Pensions Act 1975 that the late Brian O'Malley sought in all our bipartisan discussions on the Act.
I have tried to think of any reasons why the OPB might prefer to have this responsibility placed on the Department, and I cannot think of any except that the OPB might not be prepared to adjudicate on the solvency of insurance companies, but that seems unlikely because of the protection that was given by the Policyholders Protection Act. There is no reason why the OPB should want to hand any responsibility over to the Department on that score.
In a letter of 4th February the Minister made it clear that several other things

would be expected. When we raised the question in Committee during debate on Amendment No. 65, I asked the Minister whether it would be necessary, with this alternative solvency test, for individual insurance policies to be issued in the case of people leaving a firm with a contracted-out scheme; or whether a group policy could cover the liability for that contracted-out scheme.
I expected the Minister to say that we could follow the Boyd-Carpenter Act of 1973 and allow group policies, but it seems from what has been written and said that the Minister and the Department are insisting that when insurance policies are issued in connection with alternative solvency tests they must be in the names of the early leavers from the scheme. This is madness. There is no objection to a requirement that individual policies should be issued if a scheme is wound up. That is normal practice since the trustees will usually cease to exist.
However, it does nothing for the security of benefits if, while funds are continuing—although members may be leaving—we are compelled to transfer benefits from a group to an individual policy. It will also add considerably to the administrative costs that the scheme will have to bear since more members leave than stay to retirement age.
Because of the pay policy and other things which have happened in this country, many middle managers are leaving schemes—in order to get more money in other jobs—when previously they would have stayed. If this trend continues, and the Government insist on individual policies covering every member, it will make nonsense of the sensible administration of the scheme. The increased cost will reduce the amount of money available to provide benefits for members, which is, after all, the real purpose of a pension scheme, whether occupational or otherwise. It will also increase the work of the staff of the Department, who are already over-burdened.
If the amendments are accepted, it will be easy to arrive at a sensible agreement with the Board on the way in which it should operate, without prejudicing the adequacy of the alternative solvency test, but taking account of the needs of the early leavers and the occupational pension rights within insurance companies or firms


and taking care of the people who will be beneficiaries.
We want that and not administrative difficulties. We could achieve our aim easily if only the Government were prepared to see group policies issued. I am sure that if the Government discuss this amendment with the Board members, they will make the same comments as I have made.
It is difficult to expect the Department always to have the right answers on such technical matters as the alternative solvency test. We should not expect it of the Department or the Minister, but we should expect it of the Board. That is why it was set up. I hope that the Minister will see the sense of an amendment, which gives the power, restricted by Section 5 of the Act, to the Board to get on with the job for which it was set up.

12.15 a.m.

Mr. Deakins: The hon. Member for Wallasey (Mrs. Chalker) raised a number of points around the amendment and the related amendment, No. 26. Perhaps I can assure her that we stand by what I said in my letter to her dated 4th February. However, there is misunderstanding in the amendments.
The effect of the two amendments would be to place the onus of deciding whether a policy or annuity securing the guaranteed minimum pension of an individual member satisfied the conditions to be restricted on the Occupational Pensions Board. This is to misconceive the Board's sphere of responsibility and the object of the clause.
The Occupational Pensions Board has the duty of ensuring that a pension scheme as a whole meets the requirements for contracting-out and subsequently supervising the scheme's finances to ensure that it can meet its liabilities for guaranteed minimum pensions. The object of the clause is to enable a scheme to discharge its liability for State scheme premiums in respect of individual members by purchasing an insurance policy or annuity securing the individual's guaranteed minimum pension from an insurance company. The duty of ensuring that an individual's guaranteed minimum pension is secured when he ceases to be in contracted-out employment lies with

the Secretary of State. He must be satisfied that the contracted-out scheme has properly secured the guaranteed minimum pension. Hence, when an individual's guaranteed minimum pension is secured in this way it is the Secretary of State who has to be satisfied that the insurance policy or annuity contract meets the prescribed conditions and consequently it is he who issues the certificate once he is so satisfied.
There may be some confusion of thought between the Occupational Pensions Board's alternative solvency test and the effect of this clause. The Board's alternative solvency test, which is set out in its recent memorandum, No. 39, is applied to insured schemes where liability for accrued rights and pensioners' rights premium is most unlikely to arise because the scheme's insurance contract provides for annuities to be bought out in the event of the scheme being wound up. This test can be applied by the Board under Section 41(2) of the Social Security Pensions Act as it stands. The provision made by the clause is to meet the wishes of the pension interests to discharge any possible liability for accrued rights or pensioners' rights premiums where a scheme of any type buys out the guaranteed minimum pensions of individual early leavers or members leaving on retirement.
It is intended that a bought-out insurance policy or annuity contract will have to meet five conditions. They are: first, that the insurance company is one that is subject to supervision by the Department of Trade, that is, that the insurance company is one to which Part II of the Insurance Companies Act 1974 applies; secondly, the policy or annuity must provide a pension at pensionable age that is at least equal to the beneficiary's guaranteed minimum pension at that age; if it is purchased before pensionable age, it must provide for the GMP to be revalued up to that age by 5 per cent. or 8 per cent; thirdly, the part of the pension payable under the policy or annuity that represents the guaranteed minimum pension must be non-commutable and non-assignable; fourthly, if the policy or annuity is in respect of a man, it must include provision for a contingent widow's guaranteed minimum pension; fifthly, the policy or annuity must be assigned to the beneficiary.
It is intended that the administrative procedures to operate the Secretary of State's certification should be as simple as possible consonant with the proper discharge of his responsibility. Basically, a statement by the insurance company that the policy or annuity contract that it has issued is in terms that meet the prescribed conditions will be accepted by the Secretary of State, as sufficient evidence for the issue of his certificate. A notification incorporating the certificate will be issued by the Secretary of State and copies will go to both the insurance company and the administrator of the scheme that has purchased the policy or annuity.
In view of that explanation, I hope that the hon. Member for Wallasey will withdraw the amendment.

Mr. Peter Bottomley: The Minister has probably given a good reason for accepting the amendment. He said that there were five conditions and that the insurance company, have been approved by the Department of Trade, will issue a notification that it meets the Secretary of State's criteria. The Government should, therefore, accept the amendment. If the criteria are that simple, why cannot the Occupational Pensions Board fulfil the function that the Minister expects the Department to fulfil?

Mrs. Chalker: I was delighted to hear, in the Minister's closing words, that we shall now be going back to certificates of assurance. That is what we seemed to be saying, although he did not use those very words. In other words, it sounds as though what I had suggested as under the Boyd-Carpenter scheme will now be implemented by the Department.
However, it still leaves the problem that there are large areas of doubt which Ministers cannot by themselves resolve, and no one would expect or ask them to do so. But even with the combined forces of their Department, without the ongoing working knowledge of the Occupational Pensions Board they are obviously at a loss to resolve these matters fully. I still maintain that it would be very useful to have the OPB involved in the way described by the amendments, which are limited anyway. I am not totally convinced that the Secretary of State has to be the person who will issue the certificates.
During our debates on this issue over the last couple of months, we have found out a great deal more about what is going on. I have learned a lot, and I seem to remember the Minister saying that he had learned a lot, too, on this issue. Many hon. Members think that we do not talk in normal language when we come to the occupational pension schemes that we have on our statute book. But it is quite important that we are taking the advice of the industry, both through the Department and though the Opposition, when we consider these matters. I have not raised lightly the suggestion that we should replace the Secretary of State by the OPB in this amendment. I raised it because we skirted around the point, despite our new learning in Committee, for quite a long while.
Returning to the letter that the Minister sent to me on 4th February, it was obvious then that we still had not made ourselves entirely clear to each other about sorting out the difficulties. They are technical difficulties which neither the Minister, with his back-up, nor the Opposition Front Bench, with a rather more limited back-up than that at the Minister's disposal, could clarify fully. That is really the reason why we feel it most important that the OPB should be further involved.
It is true that when the Minister wrote to me following our debates in Committee at the end of January, he sought to answer a number of the questions, but it seems that even with his efforts since then, probably with the back-up of the OPB, there is no certainty in the industry that this is the best way that we can make the occupational pension scheme work.
When I was talking in Committee about the options other than buying back State scheme premiums in order to maintain the value of the guaranteed minimum pensions we got into some difficulty. Perhaps I did not then understand the matter as fully as I should have done. That may be true. When we talked about the mixed test, the Minister agreed to take the matter away and look at it. In his letter to me of 4th February he said about the mixed test,
You then asked about what you called a 'mixed test' and I can tell you that the OPB have indicated that they are prepared to consider, on an individual scheme basis, extending their alternative, insurance-based, solvency test


to schemes using a limited revaluation (that is revaluation at 5 per cent. and a state scheme premium payment). Until some of these schemes' applications have been considered by the OPB I cannot, however, develop this point further.
The crucial point is in that last sentence. It is not until the OPB has discussed the whole of this matter that the Minister can move. That is why in the issuing of certificates on this basis it is considered very sensible to see whether it might not be better done by the OPB with all the skills at its disposal.

Mr. Newton: I rise only briefly to support the amendment. Underneath all the complexities which can be argued either way regarding the Board is one relatively simple point. The Government are in the process of setting up an elaborate structure for their new pension scheme and are generally giving the Occupational Pensions Board the duty of oversight of that scheme. It seems senseless and inefficient not to give the maximut amount of responsibility to that Board, but to divide the responsibility and in some cases to make two bodies liable to have a say in the same thing.

The experience of the nationalised industries is that the process of having Ministers coming in at this, that and the other point in a system which is basically being run by somebody else has bred inefficiency, delay, excessive bureaucracy and unnecessary duplication. The Minister maintains that that will not happen because there is a legitimate and sensible separation of functions.

This proposal has been put forward by the pensions interests outside this House. It has not been dreamed up for political reasons. Therefore, there must be a strong case for allowing the Occupational Pensions Board, which will build up experience and expertise, to deal with this matter. We should maximise the use of that experience and expertise and minimise the part that the Minister plays in the day to day operation of the scheme.

My hon. Friend the Member for Wallasey (Mrs. Chalker) has made out a very strong argument for the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 14, Noes 105.

Division No. 70]
AYES
[12.26 a.m.


Bain, Mrs Maragert
Gray, Harrish
Stewart, Rt Hon Donald


Beith, A. J.
Howells, Geraint (Cardigan)
Thorpe, Rt Hon Jeremy (N Devon)


Boscawen,Hon Robert
Monro, Hector



Crawford, Douglas
Penhaligon, David
TELLERS FOR THE AYES:


Freud, Clement
Smith, Cyril (Rochdale)
Mr. Peter Bottomley and


Glyn, Dr Alan
Steel, Rt Hon David
Mr. Tony Newton.




NOES


Anderson, Donald
Eadie, Alex
Mendelson, John


Archer, Peter
Ellis, Tom (Wrexham)
Mikardo, Ian


Armstrong, Ernest
English, Michael
Morris, Alfred (Wythenshawe)


Ashton, Joe
Ennals, David
Morris, Charles R. (Openshaw)


Barnett, Guy (Greenwich)
Ewing, Harry (Stirling)
Murray, Rt Hon Ronald King


Bates, Alf
Fernyhough, Rt Hon E.
Newens, Stanley


Bean, R. E.
Foot, Rt Hon Michael
Oakes, Gordon


Bidwell, Sydney
Fowler, Gerald (The Wrekin)
O'Halloran, Michael


Bray, Dr Jeremy
Fraser, John (Lambeth, N'w'd)
Orme, Rt Hon Stanley


Brown, Hugh D. (Proven)
Garrett, John (Norwich S)
Ovenden, John


Brown, Robert C. (Newcastle W)
George, Bruce
Park, George


Buchanan, Richard
Hamilton, James (Bothwell)
Richardson, Miss Jo


Callaghan, Jim (Middleton &amp; P)
Hardy, Peter
Robinson, Geoffrey


Canavan, Dennis
Harrison, Walter (Wakefield)
Roderick, Caerwyn


Carmichael, Neil
Hooley, Frank
Rodgers, George (Chorley)


Cocks, Rt Hon Michael
Hunter, Adam
Sedgemore, Brian


Cohen, Stanley
Jackson, Miss Maragaret (Lincoln)
Selby, Harry


Coleman, Donald
Kerr, Russell
Silkin, Rt Hon John (Deptford)


Cook, Robin F. (Edin C)
Lamond, James
Silverman, Julius


Cox, Thomas (Tooting)
Latham, Arthur (Paddington)
Skinner, Dennis


Crowther, Stan (Rotherham)
Lestor, Miss Joan (Eton &amp; Slough)
Small, William


Cryer, Bob
Lomas, Kenneth
Smith, John (N Lanarkshire)


Cunningham, G. (Islington S)
Loyden, Eddie
Snape, Peter


Davidson, Arthur
Lyon, Alexander (York)
Spearing, Nigel


Deakins, Eric
Lyons, Edward (Bradford W)
Spriggs, Leslie


Dean, Joseph (Leeds West)
McDonald, Dr Oonagh
Stallard, A. W.


Dempsey, James
McElhone, Frank
Stewart, Rt Hon M. (Fulham)


Doig, Peter
MacFarquhar, Roderick
Taylor, Mrs Ann (Bolton W)


Dormand, J. D.
Madden, Max
Thomas, Mike (Newcastle E)


Douglas-Mann, Bruce
Mallalieu, J. P. W.
Thomas, Ron (Bristol NW)


Dunn, James A.
Marks, Kenneth
Tinn, James




Urwin, T. W.
Ward, Michael
Wise, Mrs Audrey


Varley, Rt Hon Eric G.
White, Frank R. (Bury)
Woof, Robert


Wainwright, Edwin (Dearne V)
Whitlock, William
TELLERS FOR THE NOES:


Walker, Harold (Doncaster)
Williams, Alan Lee (Hornch'ch)
Mr. Ted Graham and


Walker, Terry (Kingswood)
Wilson, Alexander (Hamilton)
Mr. David Stoddart.

Question accordingly negatived.

Clause 21

CITATION COMMENCEMENT AND EXTENT

Amendments made: No. 28, in page 21, line 40, leave out 'and 14(3)' and insert '14(3) and 15'.

No. 29, in page 22, line 1, at beginning insert
'Section 18(2A) of this Act shall come into force on 4th April 1977 and'.—[Mr. Orme.]

12.38 a.m.

Mr. Orme: I beg to move, That the Bill be now read the Third time.
This has been a contentious Bill. I am entitled to use this occasion to place on record and beyond doubt the contradictory attitude of the Opposition. The avowed purpose of this Bill is to make economies in public expenditure. My right hon. Friend the Secretary of State, my hon. Friend the Under-Secretary and I have made this clear on every occasion. There is an urgent need, following the July measures, to make savings in public expenditure. The proposals in the Bill represent my Department's contribution to the public expenditure savings. But I have repeatedly said that the Bill's proposals make savings which do no damage to the basic structure of the social security schemes. Indeed, those schemes are fully protected in all their essentials.
These savings are no more than our contribution towards the total savings needed. The Opposition showed their attitude on the issue of occupational pensions and unemployment benefit. I understand the arguments of my hon. Friends on these topics. The Government listened to them. The Opposition's arguments were hypocritical on these issues, as they also were on the earnings rule. Their attitude on the Floor of the House has been different from that shown in Committee. The right hon. Member for Wanstead and Woodford (Mr. Jenkin) not only voted for the

removal of the £45 million saving but he colluded with the hon. Member for Rochdale (Mr. Smith) in respect of the hon. Member's amendment. We saw the same attitude in New Clause 2, which was put down for debate tonight. That would have led to additional expenditure, as also would New Clause 3.
I do not say that the objectives behind some of the proposals put to us might not in themselves and in better times be desirable, and I recognise the convention that amendments rejected in Committee on the Chairman's casting vote reappear on Report, but I am entitled to make two observations. First, the progress of the Bill has revealed the humbug and hypocrisy with which the Opposition have approached the whole subject of public expenditure. The official Opposition constantly call for greater restraint in general, but they are very ready to oppose specific proposals for cuts when they are made in a Bill.
Second—I ask my hon. Friends to note this—throughout the proceedings on the Bill I have detected an undercurrent in the Opposition's attitude, that is the idea that it is right to resist measures which, taken as a whole, would adversely affect the better off, and instead to favour measures which hit hardest the poorer and more disadvantaged sections of our community. This became much more than an undercurrent when the hon. Lady the Member for Wallasey (Mrs. Chalker) said in Committee that one of the ways of making the original proposal in the Bill on unemployment benefit for occupational pensioners unnecessarily would be to raise the revenue by increasing prescription charges. We one this side utterly reject that attitude.
I assure the House—I stress this to my hon. Friends in particular—that the consequent increase in expenditure will be contained within the planned level of total public expenditure set out in the recent White Paper CMnd. 6721, Part 1. There will therefore be much less available for spending on other measures.
Despite the difficulties and arguments which we have had, positive proposals have been made and the Bill will be of value. It will assist the mobility allowance, it will ease the present position in connection with benefits arising from industrial diseases, and it will make other small easements in connection with unemployment benefit and claims to benefit generally. It also tidies up some of the recent social security legislation to remove doubts and allow smoother administration. I therefore commend the Bill to the House for a Third Reading.

12.43 a.m.

Mr. Patrick Jenkin: For a speech made at nearly a quarter to one in the morning, that was a quite astonishingly belligerent effort. I cannot understand why the right hon. Gentleman should want to sit here till a late hour listening to the speeches of my hon. Friends whom he will thus have provoked, and still less can I understand it when, in the first debate today, I went overboard to try to demonstrate to him what a responsible Opposition we are. We have accepted a large part of his argument on the earnings rule, and his Bill as a result has most of the savings which he intended to gain by it.
The remarkable feature of the Bill, however, is not what is in it but what is not. The right hon. Gentleman flings charges of humbug and hypocrisy across the Floor and criticises us for our attitude on Clause 4. Apparently, he forgets —I am surprised that he does, since I had not thought that he ever would—that, together with his right hon. Friend the Secretary of State, he faced the united hostility of the entire House on the proposal to disallow occupational pensioners' entitlement to unemployment benefit. There was not a single speaker in the entire Second Reading debate who supported that provision; nor had there been when the Government's predecessor tried to introduce a similar clause in 1971; nor had there been when the right hon. Gentleman the then Minister of State sought to introduce the same proposal in 1969. The House has always made it clear that it was not prepared to wear that one.
What I will say about the two right hon. Gentlemen is that they have in that

matter shown the same wisdom as my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) when, having been roundly defeated in Committee—and they were more heavily defeated than was my right hon. Friend—they accepted the logic of the situation and did not seek to reintroduce the clause on Report. Why that should be regarded as a matter of obloquy for the Opposition I fail to see.
Then there was the question of the students. To blame the Opposition for what has happened to the students is nonsense. The clause as originally introduced would have saved £1 million gross and £600,000 net. The right hon. Gentleman admitted that now the clause will not save that amount. That is not our fault. We are prepared to support it. I made it clear in Committee that if the right hon. Gentleman brought forward a logical, sensible and coherent system of support for students—a system that met the cases of householders, students with dependants and students who had flats for which they had to continue to pay rent during the vacation, and if, at the same time, he could say that it would save money, it would have our support. But he did not produce such a clause. Instead we had the Minister of State, Department of Education making an absurd speech, trying to show that the Department of Education was behind the Department of Health and Social Security.
This is a very miscellaneous Bill. It is undoubtedly more miscellaneous than when it came here for Second Reading. Nevertheless, we do not think that we should oppose it on Third Reading. In particular, the main proposals the Government have gone a long way towards making out their case by admitting that their earlier figures on the earnings rule were wrong. Although we are committed to phasing out the earnings rule as quickly as we can, at the present juncture it would not be right to support a move that would deprive the Government of the necessary savings that they think they will make.
In conclusion, in kindness to the Under-Secretary, who, I think his right hon. Friends will agree, has borne the heat and burden of the day here and upstairs and for the greater part of today, I must say


that he has dealt with the debates with great skill and courtesy and has done his best often to try to answer the unanswerable case put forward by my hon. Friends.
At the same time, I want to express my thanks to my hon. Friend the Member for Wallasey (Mrs. Chalker), who has had a much longer experience of the complexities of the social security provisions —[Interruption.] I am grateful for being corrected— "my hon. and charming Friend", whose experience of social security legislation is a great deal longer than mine and—upon whose broad shoulders, I was going to say, but that might be regarded as ungallant—on whose sturdy back I have leant heavily. [Interruption.] Any squash player will agree that the dorsal muscles are most important, and my hon. Friend is no mean squash player. I have relied upon her experience and knowledge of this legislation during the passage of the Bill and I thank her very much. To all my other hon. Friends who supported us upstairs and today, I also express my thanks.
I do not think that this Bill is the greatest that ever lived, but in the circumstances we shall not seek to prevent its reaching the statute book tonight.

12.50 a.m.

Mr. Cyril Smith: I suppose that the only Member who will compliment the hon. Member for Rochdale (Mr. Smith) is the hon. Member for Rochdale, since he was the only Liberal who served on the Committee. Tory and Labour speakers regularly congratulate their hon. Friends on excellent speeches and their grasp of the subject but when there is only one of you, the only person to give you compliments is yourself. I should like to be associated with the tributes to the Under-Secretary of State. I was impressed by the way in which he dealt with the Bill and his knowledge of the subject.
I am sorry that the Minister of State found it necessary to make such a speech moving the Third Reading. It did not do him much credit and was not worth making. In effect he said that if the Government cannot persuade their own Members to vote for their legislation, the Opposition should make sure it gets through. Three of the eight Government

Members in the Committee voted against the clause which caused his outburst. As the right hon. Member for Wanstead and Woodford (Mr. Jenkin) said, on Second Reading many Labour Members spoke against that clause dealing with occupational pensions which seems to have got the Minister of State so worked up.
Many hon. Members were opposed to the clause and voted against it because it was a rotten clause and a bad proposition. That is surely what the House is for. The Government cannot expect to get their own way all the time. Ministers should not get all egged up at the Dispatch Box because they have not got their own way on one clause and say that everyone else is irresponsible. It was a rotten clause and we were right to throw it out. I congratulate all those, including myself, who helped to throw it out: it got its just desserts.
I understand the Minister of State's problem about expenditure. I have not found it easy to vote against the Government on some clauses, for economic reasons. But I shall always take the view that as a Member of Parliament I can only judge a Bill on its merits. I am not consulted by the Government—I do not complain: it is a statement of fact—about where cuts should fall. I am merely told and left to vote for or against them. Therefore, if I do not agree with a cut, I am surely entitled to vote against it without being belaboured. It would be fair to belabour me if I were given the opportunity to say where the cuts should fall, but I do not have that opportunity. All that I can do is vote for or against the legislation as it comes before us. That is what I have done on this Bill.
The Committee on the Bill was a happy one. I have served on others which were quite violent. Although we differed, at least we agreed to differ. I did not feel there was any sourness on the Committee. It was the first social security Committee on which I have served. I do not know whether it will be the last; it probably will, because I voted against the Government too much, and the Committee of Selection will not allow that. But I enjoyed it.
I do not intend to vote against Third Reading. I have made my points, which it was right that I should make, and I believe that I did so in pursuit of the true principles of democracy.

12.54 a.m.

Mr. Richard Wood: I must apologise for delaying hon. Members' departure. I offer the assurance to any who are still suffering under the lash of the Government Whips' Office that I have no intention of dividing the House on Third Reading.
I feel a little timid about entering this discussion at such a late hour, but I was encouraged by remembering that the labourers in the vineyard who were hired at the eleventh hour received exactly the same reward—not that it was very princely by today's standards—as those who had borne the heat and burden of the day, such as my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) and the hon. Member for Rochdale (Mr. Smith).
I wanted to make this speech six or seven hours ago. I hope that I may be forgiven for making it now, because it is about a subject that is very close to my heart, one that I want to share with hon. Members. I refer to the mobility allowance, which is dealt with in Clause 11. I want to put a rather more general point that my hon. Friend the Member for Wallasey (Mrs. Chalker) raised in her amendment, which was generously conceded by the Minister responsible for the disabled.
The mobility allowance has on many earlier occasions, and in Committee and on Report, obviously won great favour and had a warm welcome—I think a warmer welcome than it might have had, if some of the implications of the change which Clause 11 carries a stage further had been fully appreciated. The change has been of obvious benefit to many people. But there are others who would have achieved a certain mobility under the old system for whom mobility will now not only be difficult but in some cases almost impossible.
I am not arguing the case for the present Invacar drivers. That would be out of order, and there will be other opportunities. The Secretary of State knows my anxiety very well. But the sum total of the provisions for the allowance which will exist when the Bill receives the Royal Assent will leave certain groups of very severely disabled people, especially the young and those who are disabled this year or in years to come, in real difficulties.
I am connected with an organisation called Queen Elizabeth's Foundation for the Disabled, which in one of its units teaches the basic technique of living. I hope that I am not speaking melodramatically in saying that. It seems to me that spontaneous mobility is essential to that basic technique. For many people no mobility allowance involving the occasional use of hired transport can take the place of their former entitlement or the entitlement they would have had, if the system had not been changed, to a vehicle of their own. That is so, no matter how generous the right hon. Gentlemen may make the allowance. In any event, some disabled people cannot use hired transport.
The old system, with its Invacars and in spite of all their inadequacies, to a large extent replaced the legs of a very severely disabled person, and it made possible spontaneous movement. Its removal destroys for many, who will anyway live very limited lives, the whole possibility of doing anything on the spur of the moment.
I should like hon. Members to put themselves in the position of a disabled person who wants to do something perfectly ordinary outside the house, such as posting a leter, buying a paper, or going to the pub. How is he to do it? He can call a taxi, if he is on the telephone and can get into a taxi, but many taxi drivers lack the strength and some even lack the will to give the necessary physical help. If he goes by taxi, what does he do with it when he gets to the pub? Does he keep it waiting, or ask the driver to come back later? What happens if he cannot find anything to take him home?
The Minister has shown himself very anxious to improve the mobility allowances, both in scale and application. They are largely welcomed, by myself included. Although they will be of benefit to many, I do not believe—and I hope the right hon. Gentleman does not believe—that they are a perfectly satisfactory answer to the problems that I have mentioned.
My main concern has been with younger people and people of middle age who are perhaps newly disabled. I am also worried about people who face an old age of sadly restricted mobility. I doubt whether any of us, including the


Government, expect this Bill to be the last word of a civilsed, if at the momnt rather impoverished, society on the subject of mobility. All I am asking is for recognition by the right hon. Gentleman and the Minister for the disabled, both of whom are men of great humanity, that the new and in many ways more enlightened system does not solve all the problems but in fact accentuates some of them.
I beg the Minister to continue to search for ways of restoring, or providing for the first time in the lives of some very severely disabled people, the precious gift of spontaneous mobility which most of us here naturally take for granted.

1.1 a.m.

Mr. Peter Bottomley: That distinctive and persuasive speech by my right hon. Friend shows that the labourer who came at the eleventh hour was worthy of his hire.
I have been persuaded to speak because of the Minister's bellicose Third Reading speech. The reason for that was that it was typed before the end of the Report stage and could not take into account the reasonable and responsible attitude of the Conservative Opposition.
The only point I wish to make is on the Minister's comment that the Conservative side was trying to hit the poorest hardest. That is an offensive remark coming from a Government who are being taken to court by three old-age pensioners for changing the basis of the calculation of the uprating of the retirement pensions, and from a Government which refuses to legislate for uprating or at least reviewing the level of child benefit.

1.2 a.m.

Mr. Newton: I should like to add a word. None of us had any intention of speaking on Third Reading until we heard the Minister's speech. We were all agreed that we would not have a long Third Reading.
Many of my hon. Friends were much angered by the rather stupid remarks that the Minister made about the attitude of the Opposition, especially in the light of the Government's attitude during the course of the Bill. There is little point hurling abuse at this hour and my only excuse is that the Minister started it.
I should like to make two points. First, the Minister stated that in the course of meeting the Treasury's demands for cuts in public expenditure, which we all understand, he thought that had done no damage to the fundamental structure of the social security system. I ask him to consider whether he really means that about a Bill which started off by seeking to withdraw unemployment pay from people who were unquestionably entitled to it under the rules of the scheme and which has now written into it a provision which says that people shall be assessed on income which they do not in fact have. Whether they have it or not the Supplementary Benefits Commission will not deal with them on the basis of the income they have.
Perhaps that is necessary. Perhaps the Treasury has imposed that and perhaps even the Minister is proud of it. But to say that this does no damage to the fundamental structure of the social security system is absolute rubbish, and the Minister must know that it is.
The other point I should like to make is slightly more generous to the Minister because in fairness to him and to the Parliamentary Secretary the general spirit in which they conducted discussions on the Bill was better than the spirit in which the Minister conducted his Third Reading speech. As the hon. Member for Rochdale (Mr. Smith) will know, far from having an unpleasant Committee upstairs we had a very civilised and reasonable Committee stage.
I therefore conclude by saying that I actually feel sorry for the Minister. I suspect that his outbursts of spleen are due to his having had a miserable time bringing before the House proposals with which he himself does not agree. We have seen the Chief Secretary to the Treasury sitting alongside the Minister on several occasions, undoubtedly to prevent any backsliding and to ensure that what the Treasury wanted was carried out. That is not a comfortable position for a social security Minister, and in that sense the right hon. Gentleman deserves our sympathy, but not to the extent of venting his frustration and unhappiness at some of the damage he has had to do on the Opposition.

Question put and agreed to.

Bill accordingly read the Third time and passed.

MARRIAGE (SCOTLAND) BILL [LORDS]

Ordered,
That the Marriage (Scotland) Bill [Lords] may be proceeded with as if it had been certified by Mr. Speaker as relating exclusively to Scotland.—[Mr. Harry Ewing.]

MARRIAGE (SCOTLAND) BILL [LORDS]

Order for Second Reading read.

Ordered,
That the Bill be referred to the Scottish Grand Committee.—[Mr. Harry Ewing.]

HOUSE IMPROVEMENT GRANTS (SCOTLAND)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Frank R. White.]

1.6 a.m.

Mr. Hamish Gray: I am very pleased to have this opportunity to raise the subject of housing improvement grants in the rural areas of Scotland.
This is one form of grant which provides a very good yield for local authorities. It ensures that the recipient, in return for a modest amount of grant aid, spends a substantial amount of his or her own money, modernising in the process a property which will improve the amenity of the locality, provide a substantially enhanced rateable value for the council, and, of course, greatly add to the life span of the house in question. In such circumstances, it is important that no property on which a proprietor is prepared to spend a substantial amount of money on genuine improvement should be excluded from grant-earning status purely because of the way in which certain of the guidelines have been framed.
During the course of my remarks, I shall try to make some constructive proposals for improving and amending the guidelines which are issued to local authorities and within which they must operate if they hope to receive Exchequer contribution on the grants which they award. At present it is my view that

these guidelines do not always take into account the conversion problems which are frequently encountered during the alteration of single, semi-detached or small flatted houses so frequently found in our villages or small towns.
While present regulations may work well in urban areas with a high proportion of tenement properties, they reveal serious limitations when applied elsewhere. This has resulted in the past in certain of my constituents being deprived of grant aid when I consider that their applications certainly came within the spirit of the grant, but were refused on minor technicalities.
Ross and Cromarty District Council carried out a housing survey during 1976 and published its findings on 1st September. These showed that there existed some 2,300 houses which did not meet the tolerable standard. By way of enabling many of these houses to qualify for a grant, certain amendments should be made to the Scottish Development Department Circulars Nos. 29/1974 and 72/1975. The 29/74 Circular spells out the purpose of the grant as being
to secure a significant and worthwhile improvement of the unsatisfactory housing stock of the country".
That is a sentiment with which I wholeheartedly agree, but regrettably certain of the guidelines frustrate this very aim.
The passage on enlargement or extension of houses then reads:
In the normal course it is expected that a family will move to a larger house when it outgrows its present house.
But in a rural district this is often impossible. Many houses in, for example, Wester Ross are principally croft houses which, by virtue of their basic design, are limited in their overall size and have poor accommodation on the upper floor. Furthermore, in many rural areas it is unlikely that there will be alternative private houses available, while to provide public sector housing would place yet a further burden on the housing authority. Many of the small houses in the rural parts of the Highlands have two ground floor rooms and two top rooms and are occupied by persons with young children. If these occupiers were to be deprived of grant to assist them to increase their accommodation in what must otherwise be satisfactory houses, the result would be an exodus from the area concerned.


Most of these families live fairly close to their place of work, and to move some distance away would increase transport costs and create financial loss.
In the old fishing villages of Easter Ross we have examples of the traditional half house, where the fishermen not only had shares in the boat in which they sailed but often in the house in which they lived, so that frequently families of crew members shared the same accommodation. The result is that rooms of a house being occupied by different families has posed difficulties in determining eligibility for grant. Consequently, and taking into account fire regulations, it is usually necessary to extend the existing accommodation.
Another example of the inadequacy of the regulations can be found where the roof covering of an original cottage may have been of thatch, which has in the past normally been replaced by corrugated iron or asbestos. This necessitates the removal of a main element of the structure. Invariably, slappings have to be made in the walls in order to improve access or to provide larger windows, while the wall head may also require to be raised, and the subsequent extent of the work may lead to the argument that the overall alteration constitutes rebuilding and the house may not therefore be considered suitable for grant aid. Nevertheless, to refuse grant in such a case could preclude the improvement of these traditionally-built houses, on which people are prepared to spend a large amount of their own savings—thus maintaining their homes in an attractive state and up to tolerable standard. Further problems are encountered when properties lie within a conservation area.
I have had a great deal of correspondence with the Director of Environmental Health in Ross and Cromarty on this subject, and I have also met the subcommittee of the Environmental Health Committee in an effort to be constructive in proposals to improve the situation. I am grateful to the director and to the sub-committee for the co-operation and assistance which they have given to me.
Having considered all these matters, I should like to suggest the following amendments to the guidelines, and I hope that the Minister will be sufficiently flexible to accept these suggestions, which could very easily be implemented,

while the resultant benefit would be welcome throughout the rural areas of Scotland.
First I suggest that a room should not be accepted as a sleeping apartment unless the ceiling height, if upstairs, is a minimum of two metres over not less than half the floor area and it has a window, that to attain the above standard the formation of a dormer window be accepted as a permissible extension, and that the removal of one pitch of the roof to allow such proposals be regarded as falling within the guidelines. Secondly, I believe that provision of a dormer window to contain a bathroom should be accepted as a permissible extension and that the removal of one pitch of the roof to allow such proposals should be regarded as falling within the guidelines. Thirdly, I suggest that extension to provide a kitchen, and for a bathroom should be permitted even if it could be contained within the existing house but by so doing would cause overcrowding. Fourthly, extension by one additional bedroom should be allowed where the local authority is satisfied that a need exists and that it would be unreasonable to expect the applicant to move house.
I am aware that it is possible to obtain larger grants for housing action areas, but there are practical difficulties in forming such areas within many rural areas, and certainly within the district of Ross and Cromarty. Furthermore, it is doubtful that the requirements of circular 69 of 1976 could be met in this regard. I refer in particular to the paragraphs that relate to tenants before 1914. I doubt that we have any of that category that could qualify. I therefore believe that the amendments which I have suggested form a more practical method of improving the situation, and I very much hope that the Minister will accept them.
As the Minister will be aware, there are several cases under consideration by the SDD for grant aid in Ross and Cromarty at this time. Special circumstances have been argued for these cases, and I hope that it will be possible to give Exchequer grant. In most of those cases, however, there would have been no necessity even to refer them for special consideration had the proposals that I now suggest been operative. The Ross and Cromarty District Council has recently changed its policy on these grants and


it is now its intention to take the basic decision itself in many more cases than has been possible in the past, and to refer to the SDD those cases that come near the borderline or about which there is considerable doubt.
Having made these proposals, I sincerely hope that the Minister will be able to accept them or at least give me an assurance that he will look at them carefully, because I genuinely believe that people living in my part of the country and in rural areas generally would benefit greatly from what I have suggested.

1.17 a.m.

Mr. Donald Stewart: I thank the hon. Member for Ross and Cromarty (Mr. Gray) and the Minister for allowing me this brief incursion into the debate. I congratulate the hon. Gentleman on instituting a debate on this matter.
In 1972 the convener of the Inverness-shire's landward health committee said that the housing stock standards in Barra and the Uists were "astounding". He said that 51 per cent. of the houses were below standard and 28 per cent. unfit for human habitation.
The last Administration introduced a scheme for 75 per cent. housing grants. It was introduced for a year and extended for a further year. I appreciate current financial difficulties, but I make a plea to the Minister to reinstitute that scheme for a year or possibly two years. The former Secretary of State—now Lord Campbell of Croy—said in introducing the scheme that it would help unemployment and improve the housing stock. Those needs still exist. Such a scheme would make a contribution towards savings since it now costs £20,000 to build a local authority house in the Outer Isles.

1.19 a.m.

The Under-Secretary of State for Scotland (Mr. Hugh D. Brown): I shall certainly look at the specific points that have been raised by the hon. Member for the Western Isles (Mr. Stewart) and at the general remarks of the hon. Member for Ross and Cromarty (Mr. Gray). If anything needs to be looked into it will be, and I shall write to the hon. Gentleman about it. I compliment the hon. Member for Ross and Cromarty because I always feel that anybody who can be enthusias-

tic on any subject in this place after 1 o'clock in the morning deserves to be congratulated. The hon. Gentleman has put his case with moderation—I hope that is not misunderstood outside—and courtesy and has been most constructive.
I do not know whether I can give him all the assurances that he seeks, but it might be helpful if I outline some of the background to our policy. We are dealing with a situation in which about 160,000 houses are estimated by local authorities in Scotland to be below the statutory tolerable standard. That is about one house in every 11 of the total housing stock and one in six of the private sector stock. Virtually all sub-standard houses are older properties in private ownership. This fact is confirmed by the survey that was conducted by the hon. Gentleman's authority and to which he referred.
The tolerable standard is a set of objective criteria laid down in the Housing (Scotland) Act 1974. The problem of unsatisfactory housing is a large one and it is in this context that the former Secretary of State said in the Scottish Grand Committee that the main purpose of the changes to the improvement schemes was to make them more selective and to ensure that assistance was concentrated on those houses most in need of improvement. Our policy is that grants should go to inadequate houses which fall below the tolerable standard or are otherwise deficient in amenities, with priority to areas where there are concentrations of unsatisfactory houses.
The 1974 Act enabled local authorities to define housing action areas for improvement where the majority of houses are below the tolerable standard or lacking reasonable bathroom facilities—a bath or shower and a wash basin. In these action areas the financial incentives are greater, with grant at the rate of 75 per cent., or higher in hardship cases, and with an absolute obligation on local authorities to grant-aid work needed to bring houses up to the standard specified for the area.
Outside the housing action areas, there is also an absolute obligation on authorities to give limited grants towards the provision of standard amenities—water closet, bath or shower, wash-hand basin —where these did not previously exist. It is the practice of most authorities to


go for improvement grants rather than these standard grants, but there are opportunities of getting the standard amenities. Generally, grants are given at the discretion of local authorities. We have issued advice to authorities as to how they should use their discretion. Our advice is not absolutely binding on them. We do not expect rigid uniformity amongst the authorities in their attitudes to house improvers, and a council could here and there set aside our advice, but knowing that Exchequer contribution might not be paid towards the grants concerned.
The hon. Member has argued that we are too restrictive. How shall I summarise our advice to the authorities who administer the grant scheme? It is broadly that grant should go towards work on unsatisfactory houses, making good basic deficiencies. We encourage the giving of grants on such things as provision of damp courses, of adequate bathrooms and kitchens, and of effective hot water supplies. We advise against grant simply for provision of central heating or for replacement of fittings which, though old, are in themselves adequate.
We advise that grant should not normally go to extend or enlarge houses which are not in themselves unsatisfactory houses. This point was raised by the hon. Gentleman. It would be unreasonable to prevent an improvement that is an extension if there are limited opportunities for a family to grow and if—unlike in more populated areas—it would have no chance of finding another house. The provision is intended for exceptional circumstances where there is no alternative housing opportunity.
We also advise that improvement grant should not be given for work which comes close to building a new house. I agree that this is controversial. People who wish to build new houses are expected to supply their own finance and we see no reason why grant should be given out of public taxes and rates for work which is tantamount to rebuilding on the old foundations of a derelict building.
The hon. Member for Ross and Cromarty is not alone in saying that we are a little restrictive in our advice. But I am sure that on reflection he will agree that a line must be drawn somewhere and that when a new house is being created

out of old walls it does not come into the category of improvement in the sense about which we are talking.
We do not want to prevent people from making use of abandoned derelict buildings. We say that it should not be done at the public expense. Our emphasis is on improving existing, usable houses. That is the type of improvement which attracts grant, not the creation of a new house. We expect the local authority to offer grant for a house which is below the tolerable standard. But it is not our wish—especially in these times of financial stringency—that funds should be dissipated in supporting ambitious schemes which, because of their nature, go beyond the scope of house improvement.
I do not agree that it is unreasonable to expect Ross and Cromarty to work under the housing action area procedure. I should be more than willing to offer official advice and help if that authority wished to operate in that way. I say in the kindest manner that if the procedure can be operated in the Western Isles, it cannot be beyond the wit of Ross and Cromarty to do likewise.
Ross and Cromarty could do with encouragement. It could make a substantial contribution to the improvement of houses in the area. Ross and Cromarty, I am sorry to say, is one of the worst authorities in terms of the number of sub-tolerable houses, although its progress has been significant this year. I do not criticise that authority because it was left with this heritage by the old authorities.
I refute the contention that there are differences between the rural areas and the four cities where 60 per cent. of sub-tolerable houses are to be found. I know that the problem is different. There may be technical difficulties but the procedure is there if there are unique differences. In my experience Ross and Cromarty is a unique authority. Therefore, I do not think that it is true that there is any great problem in the rural areas that we have not managed to work out amicably with other authorities.

Mr. Gray: Is the Minister prepared to look at the suggestions that I have made? I am convinced that they would improve the situation.

Mr. Brown: I am coming to that matter.
As I say, the important thing about improvement, particulary in the housing action areas, is that the initiative really rests with the local authority. Perhaps the argument is that we are too restrictive, but I must make it quite clear that we have imposed no financial restriction, I am glad to say, on this sector of housing expenditure.
No authority, rural or otherwise, has yet been asked to restrict the amount of expenditure on improvement grants, so that is not the problem. In fact, in the current year, 1976–77, we expect local authorities to take on expenditure of about £9½ million. That is our estimate of what it might be. The central Government contribution to the funding of the borrowing involved in that is quite considerable. Therefore, we are making a generous financial contribution.
There is procedure for exceptions to be made. In the context of the guidelines, I should like to have a look at the hon. Gentleman's suggested amendments. I had better call them amendments 1 and 2. I think that there is a little misunderstanding here. I think that amendments 3 and 4 would be within the guidelines, but I note that the hon. Gentleman has had one or two cases about which the authority has not been happy, I am delighted to hear that the authority has at last seen the benefit of the advice that we have been giving to it. We want to give local authorities freedom, as long as they see their way to operating within the guidelines. I am sure that if the hon. Gentleman consults other authorities, or other hon. Members, he will find that they agree that the system works reasonably well.
However, for some reason that escapes me Ross and Cromarty has been slightly difficult in seeing the benefit of working within the guidelines and referring only the very odd, exceptional case to us. It is not our intention to be the authority that should be giving approval for every grant—which is almost what Ross and Cromarty was suggesting at one time. I am glad to say that the advice that we have given to the authority and the talks that we have had with the authority have apparently borne fruit.
The hon. Gentleman said that we have given a modest amount of grant, and that as a general principle when people were

spending or investing it was reasonable to be as generous as possible. The grant can be as much as £1,850. It is not an insignificant sum bearing in mind that after five years the person who invests it gets the total benefit of all that. I do not think that the hon. Gentleman is suggesting that we should not have some kind of guidelines under which to operate. I think that they are satisfactory and reasonable. Obviously, however, if there are specific cases that have disturbed the hon. Gentleman, I am always willing to look at them as sympathetically as possible.
This has been a very useful debate. Although I am not looking for work, I want to make one final point. We have no knowledge of any unique problems in the fishing villages or problems peculiar to them. There may be some doubt about who owns the title deeds of split houses, but we have no particular knowledge of such problems. It may be that some legal problem is involved. If the hon. Gentleman can throw any light on some of the problems that people have raised with him, I shall be delighted to look at that aspect in case there is something unusual about Ross and Cromarty of which I am not aware.
If I have overlooked other points, I shall read what has been said with great care. The hon. Member for Ross and Cromarty is a very active Member and I like to encourage him as often as possible. I shall see whether there is any way in which we can continue to improve the good relationship that I think we have with his authority.

Mr. Gray: I am grateful to the Minister for that reply. I am glad that he recognises and acknowledges that Ross and Cromarty is a unique constituency. I hope that it will receive unique treatment from the Scottish Office at all times.

Mr. Brown: I said that it was unique in some respects. I think that we have overcome that aspect and got it into line with the other authorities in Scotland. That is all that I need say at this stage. If I have overlooked anything, I shall certainly discuss it with both hon. Gentlemen who have raised this matter tonight.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes to Two o'clock.